Individual Disability Insurance Quote Evaluation Needed

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Topic Author
lmea
Posts: 16
Joined: Wed Mar 25, 2015 8:06 pm

Individual Disability Insurance Quote Evaluation Needed

Post by lmea » Sun Jan 06, 2019 10:50 am

Hi,

I read some posts on the forum about individual disability insurance. I also read the 7-part series on the topic from The White Coast Investor's page (https://www.whitecoatinvestor.com/perso ... rotection/).

Gender: Female, age: 35, annual income: $66000, state: NY. I only want to have an individual disability insurance that covers 2500$ monthly benefit.

An independent agent gave the the following quote. Can you please help evaluate the below quote?
- Occupation class: 4A
- Provider: Ameritas
- Gender: Female, non tobacco

The policy is: Noncancelable and Guaranteed Renewable
- Maximum monthly benefit is $2500
- Nondisabling injury benefit is: $1250
- Optional riders selected:
+ Enhanced Residual Disability Rider
+ Future Increase Option Rider (FIO): $7500 (Through the age 40, the insured may exercise at full amount of this rider, on any given policy anniversary. On each subsequent anniversary date, age 41 through 55 may exercise 50% of the original base monthly benefit of the policy, provided you qualify financially. The total of all increases may never exceed the amount purchased by the FIO)
+ Catastrophic Disability Rider (CAT): $2000 (maximum catastrophic benefit period: To Age 65)

Noncancelable/Guaranteed Renewable to Age 65: Until you reach age 65, your policy can not be canceled, premium can not be increased, and restrictions can not be added, as long as you continue paying premium as due.

Own Occupation for the Length of the benefit period (OO): Total disability means that, solely due to a sickness or injury, you are not able to perform the materials and substantial duties of your occupation. Your occupation means the occupation or occupations that you were engaged in, based on the duties you were performing for wage or profit, at the time disability began. If you are not employed at the time of disability, your occupation means a reasonable occupation you are able to perform based on your education, training, and experience. (Then, it has a section about physicians' specific occupation, but I am not a physician so I will skip it here).

Quote details, two cases below:

90 days elimination period: total of $196.97 monthly
- Base policy: $124.08
- Enhanced Residual Disability rider: $22.81
- FIO rider: $43.87
- CAT rider: $7.21

180 days elimination period: total of $165.38 monthly
- Base policy: $103.67
- Enhanced Residual Disability rider: $18.92
- FIO rider: $35.58
- CAT rider: $7.21

Questions:

1. Can you please evaluate these quotes? Which option is better? Are they reasonable?
2. I want to drop Future Increase Option rider. I do not expect my salary will increase much in the future. Also, in 10 years, I should be self-insure, so $2500 is good for me. Should I drop the FIO rider? What factors should I consider ?
3. For the current FIO, does that mean until age 40, I can increase to $7500 monthly benefit at most, for each anniversary? And, then from age 41 to 55, I can increase $1250 monthly benefit at most, for each anniversary? The total monthly benefit will never be more than $7500? Or, the total of increases is never be more than $7500, so the monthly benefit is never be more than $2500 + $7500 = $10000 ?

Thank you very much for your help.

sir_throckmorton
Posts: 19
Joined: Tue Dec 26, 2017 11:04 pm

Re: Individual Disability Insurance Quote Evaluation Needed

Post by sir_throckmorton » Sun Jan 06, 2019 11:24 am

The main difference between the two quotes is the elimination period. That means the length of time from becoming disabled until you will start receiving the benefit payout. So if you were to take the 180 elimination period, you will need a 6-month emergency fund to carry you to that point. You pay more in the monthly premium for the 90 day elimination period because you receive the benefit earlier. I have a 90 day elimination period on mine, because although I have a 6 mo+ emergency fund saved, that's a fairly long time to go without any income if you become disabled.

If you don't expect much of an increase in salary, then I don't see why the FIO rider is necessary. However, you never know what opportunities may present themselves in the future. If you don't get sick between now and then, you could simply re-apply for new disability insurance with a higher benefit if you had dropped the FIO rider. However, if you double or triple your salary and you happen to develop some chronic illness between now and then, you may be stuck and have a difficult time increasing the benefit without significantly increasing your premium.

Startled Cat
Posts: 457
Joined: Thu Apr 03, 2008 8:54 pm

Re: Individual Disability Insurance Quote Evaluation Needed

Post by Startled Cat » Sun Jan 06, 2019 12:02 pm

At first I was going to suggest that the quotes seem expensive. I'm paying $155 per month for a similar individual disability policy with a $7200/month maximum monthly benefit, and my age is about the same. My rate is a unisex rate, so gender shouldn't be a big factor (I've heard that normally women pay more than men for disability insurance). Also, since I purchased my policy through my employer without underwriting, I expect I'm not getting the best deal possible - the insurance company has to account for adverse selection and so on.

However, I suspect that the FIO rider may be the reason your premium seems high for the benefit amount. The insurance company may ultimately be on the hook for $7500/month, so they have to price the policy accordingly.

My naive analysis is that quotes seem reasonable if you include the FIO rider and expect to exercise it, but otherwise seem expensive. That's one factor that would push me towards including the rider. Even if that wasn't a consideration, I would strongly consider including it anyway. What if inflation is high over the next 10 years? But the rider is expensive, and you seem to think you won't use it.

I would lean towards the 180 day elimination period as a way to make the policy more affordable. You suggest that you'll likely be able to self-insure in 10 years, so hopefully you're well on your way to this goal, and will be able to go without the $7500 benefit difference in the event you make a claim.

sir_throckmorton
Posts: 19
Joined: Tue Dec 26, 2017 11:04 pm

Re: Individual Disability Insurance Quote Evaluation Needed

Post by sir_throckmorton » Sun Jan 06, 2019 12:30 pm

If you're working with an independent agent, I would ask him or her to run quotes with other companies. For reference, I'm a 31 yo M and paying a $1257 annual premium ($104.75/mo), which includes all riders, for a $5000/mo benefit. As the poster above alluded to, women do pay more than men for disability insurance as a general rule. However, your quote does seem expensive.

Topic Author
lmea
Posts: 16
Joined: Wed Mar 25, 2015 8:06 pm

Re: Individual Disability Insurance Quote Evaluation Needed

Post by lmea » Sun Jan 06, 2019 5:19 pm

Thank you all very much for your reply.

The agent who bought my home insurance give me contact of this agent who gave me the individual disability insurance quote with Ameritas. I would like to have a second opinion on individual disability insurance quote but I do not know how to find other agents.

Do you know how to find independent agents who can provide quotes for individual disability insurance ?

Thanks,

sir_throckmorton
Posts: 19
Joined: Tue Dec 26, 2017 11:04 pm

Re: Individual Disability Insurance Quote Evaluation Needed

Post by sir_throckmorton » Mon Jan 07, 2019 10:36 pm

The WCI lists a number of independent agents on his site.

BruDude
Posts: 2981
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: Individual Disability Insurance Quote Evaluation Needed

Post by BruDude » Tue Jan 08, 2019 1:36 am

Premium seems high for the benefit amount, but that's probably because of the 4A occupation class, which is the equivalent of a class 3 with most other DI companies. What is your occupation?

The FIO rider means that you can add up to $7500/month on top of the base $2500, for a total of $10k/month. You could choose a lower FIO amount like $2500 or $5000 to reduce the cost instead of getting rid of it altogether.

You also mentioned that you should be self-insured in 10 years which seems very optimistic at a $66k salary and living in a high cost of living state like NY. Do you have other income or assets that weren't mentioned that would get you to the point of being self-insured at age 45? You're basically saying that you will not need any income by age 45, which would be pretty unrealistic even for someone making $300k, let alone $66k.

It seems strange that they would quote the catastrophic disability rider for you without quoting any type of Cost of Living Adjustment rider, which is much more important. If you become disabled tomorrow, that $2500/month is only going to be worth half as much in 20 years, hence the use of a COLA rider to keep pace with inflation. Maybe they did that to keep the cost down, hard to say without knowing what conversation you had with the agent.

Other than the omission of a COLA rider, they quoted you a very good policy. Guardian, Principal, and Standard are going to be the other companies you want to look at. Ohio National is very competitive, but they are not available in New York.

Topic Author
lmea
Posts: 16
Joined: Wed Mar 25, 2015 8:06 pm

Re: Individual Disability Insurance Quote Evaluation Needed

Post by lmea » Thu Jan 10, 2019 2:08 pm

sir_throckmorton wrote:
Mon Jan 07, 2019 10:36 pm
The WCI lists a number of independent agents on his site.
Thank you very much. I find several agents on this page:
https://www.whitecoatinvestor.com/websites-2/insurance/

It is unclear if these agents are sponsors of WCI's site. But, I will reach out to some.

Topic Author
lmea
Posts: 16
Joined: Wed Mar 25, 2015 8:06 pm

Re: Individual Disability Insurance Quote Evaluation Needed

Post by lmea » Thu Jan 10, 2019 2:09 pm

BruDude wrote:
Tue Jan 08, 2019 1:36 am
Premium seems high for the benefit amount, but that's probably because of the 4A occupation class, which is the equivalent of a class 3 with most other DI companies. What is your occupation?

The FIO rider means that you can add up to $7500/month on top of the base $2500, for a total of $10k/month. You could choose a lower FIO amount like $2500 or $5000 to reduce the cost instead of getting rid of it altogether.

You also mentioned that you should be self-insured in 10 years which seems very optimistic at a $66k salary and living in a high cost of living state like NY. Do you have other income or assets that weren't mentioned that would get you to the point of being self-insured at age 45? You're basically saying that you will not need any income by age 45, which would be pretty unrealistic even for someone making $300k, let alone $66k.

It seems strange that they would quote the catastrophic disability rider for you without quoting any type of Cost of Living Adjustment rider, which is much more important. If you become disabled tomorrow, that $2500/month is only going to be worth half as much in 20 years, hence the use of a COLA rider to keep pace with inflation. Maybe they did that to keep the cost down, hard to say without knowing what conversation you had with the agent.

Other than the omission of a COLA rider, they quoted you a very good policy. Guardian, Principal, and Standard are going to be the other companies you want to look at. Ohio National is very competitive, but they are not available in New York.
Thank you very much. I have talked to an Guardian agent (sent to me from Guardian website) and ask for a quote with the COLA rider.

Topic Author
lmea
Posts: 16
Joined: Wed Mar 25, 2015 8:06 pm

Re: Individual Disability Insurance Quote Evaluation Needed

Post by lmea » Wed Jan 16, 2019 9:26 am

Hi,

I got a quote from Guardian, it has Enhanced Partial Disability Benefit rider and COLA 3% rider, elimination period of 180 days, the annual estimate is $1650. This is very close to the quote I got from Ameritas for the same riders and base benefit.

Guardian's True Occupation Definition is : "Total Disability Definition: True Own Occupation - You will be totally disabled if, solely due to injury or sickness, you are unable to perform the material and substantial duties of your occupation. As long as you are totally disabled, benefits will not be reduced even if you are working in another occupation."

The True Occupation in Ameritas's quote is: "Own Occupation for the Length of the benefit period (OO): Total Disability or Totally Disabled means that, solely due to a sickness or injury, you are not able to perform the material and substantial duties of
your occupation. Your occupation means the occupation or occupations that you were engaged in, based on the duties
you were performing for wage or profit, at the time disability began. If you are not employed at the time
of disability, your occupation means a reasonable occupation you are able to perform based on your
education, training and experience."

I am not a physician.

Which occupation definition is better? Are they the same? Is the Ameritas's occupation definition more specific and clearer?

Thank you very much,

BruDude
Posts: 2981
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: Individual Disability Insurance Quote Evaluation Needed

Post by BruDude » Wed Jan 16, 2019 1:22 pm

lmea wrote:
Wed Jan 16, 2019 9:26 am
Hi,

I got a quote from Guardian, it has Enhanced Partial Disability Benefit rider and COLA 3% rider, elimination period of 180 days, the annual estimate is $1650. This is very close to the quote I got from Ameritas for the same riders and base benefit.

Guardian's True Occupation Definition is : "Total Disability Definition: True Own Occupation - You will be totally disabled if, solely due to injury or sickness, you are unable to perform the material and substantial duties of your occupation. As long as you are totally disabled, benefits will not be reduced even if you are working in another occupation."

The True Occupation in Ameritas's quote is: "Own Occupation for the Length of the benefit period (OO): Total Disability or Totally Disabled means that, solely due to a sickness or injury, you are not able to perform the material and substantial duties of
your occupation. Your occupation means the occupation or occupations that you were engaged in, based on the duties
you were performing for wage or profit, at the time disability began. If you are not employed at the time
of disability, your occupation means a reasonable occupation you are able to perform based on your
education, training and experience."

I am not a physician.

Which occupation definition is better? Are they the same? Is the Ameritas's occupation definition more specific and clearer?

Thank you very much,
The definitions are basically the same, both are good policies. If Guardian is in the same price range, I would definitely go with Guardian. They have the best disability insurance you can buy. Ameritas limits your mental/nervous benefits to 24 months maximum, Guardian is unlimited. That alone is reason enough to choose Guardian at the same price point, let alone the other features that Guardian offers and the better financial rating of the company.

Topic Author
lmea
Posts: 16
Joined: Wed Mar 25, 2015 8:06 pm

Re: Individual Disability Insurance Quote Evaluation Needed

Post by lmea » Tue Jan 22, 2019 9:36 pm

BruDude wrote:
Wed Jan 16, 2019 1:22 pm
lmea wrote:
Wed Jan 16, 2019 9:26 am
Hi,

I got a quote from Guardian, it has Enhanced Partial Disability Benefit rider and COLA 3% rider, elimination period of 180 days, the annual estimate is $1650. This is very close to the quote I got from Ameritas for the same riders and base benefit.

Guardian's True Occupation Definition is : "Total Disability Definition: True Own Occupation - You will be totally disabled if, solely due to injury or sickness, you are unable to perform the material and substantial duties of your occupation. As long as you are totally disabled, benefits will not be reduced even if you are working in another occupation."

The True Occupation in Ameritas's quote is: "Own Occupation for the Length of the benefit period (OO): Total Disability or Totally Disabled means that, solely due to a sickness or injury, you are not able to perform the material and substantial duties of
your occupation. Your occupation means the occupation or occupations that you were engaged in, based on the duties
you were performing for wage or profit, at the time disability began. If you are not employed at the time
of disability, your occupation means a reasonable occupation you are able to perform based on your
education, training and experience."

I am not a physician.

Which occupation definition is better? Are they the same? Is the Ameritas's occupation definition more specific and clearer?

Thank you very much,
The definitions are basically the same, both are good policies. If Guardian is in the same price range, I would definitely go with Guardian. They have the best disability insurance you can buy. Ameritas limits your mental/nervous benefits to 24 months maximum, Guardian is unlimited. That alone is reason enough to choose Guardian at the same price point, let alone the other features that Guardian offers and the better financial rating of the company.
Thank you very much, BruDude.

Is the mental/nervous benefits important? I got quotes from Standard, Ameritas, and even Guardian. If the based monthly benefit is low (e.g., 2500$), then the mental/nervous benefits is limited to 24 months by all providers. However, if the based monthly benefit is higher (with a higher monthly premium, of course), then the mental/nervous benefits is unlimited (e.g., to age of 65).

So, I wonder if the unlimited mental/nervous benefits should be considered required in the long term disability insurance quote as well? I do not see White Coat Investor's website or previous posts on the long term disability insurance in this forum talked about this mental/nervous benefit explicitly.

Please advise.

Thank you,

BruDude
Posts: 2981
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: Individual Disability Insurance Quote Evaluation Needed

Post by BruDude » Tue Jan 22, 2019 11:35 pm

lmea wrote:
Tue Jan 22, 2019 9:36 pm

Thank you very much, BruDude.

Is the mental/nervous benefits important? I got quotes from Standard, Ameritas, and even Guardian. If the based monthly benefit is low (e.g., 2500$), then the mental/nervous benefits is limited to 24 months by all providers. However, if the based monthly benefit is higher (with a higher monthly premium, of course), then the mental/nervous benefits is unlimited (e.g., to age of 65).

So, I wonder if the unlimited mental/nervous benefits should be considered required in the long term disability insurance quote as well? I do not see White Coat Investor's website or previous posts on the long term disability insurance in this forum talked about this mental/nervous benefit explicitly.

Please advise.

Thank you,
Yes they are important, mental/nervous claims are about 10% of all disability claims, which is the third-leading cause of DI claims according to Guardian. The monthly benefit shouldn't have anything to do with whether mental/nervous is limited to 24 months or not. Ameritas always limits the benefit to 24 months. Guardian and Standard are both unlimited (Guardian does have a cheaper option with a limitation). Principal limits to 24 months if you choose the Regular Occupation (i.e. own occupation) definition of disability. Certain occupations like anesthesiologist/ER doctor also require a 24-month limitation.

Topic Author
lmea
Posts: 16
Joined: Wed Mar 25, 2015 8:06 pm

Re: Individual Disability Insurance Quote Evaluation Needed

Post by lmea » Wed Jan 23, 2019 9:49 am

BruDude wrote:
Tue Jan 22, 2019 11:35 pm
lmea wrote:
Tue Jan 22, 2019 9:36 pm

Thank you very much, BruDude.

Is the mental/nervous benefits important? I got quotes from Standard, Ameritas, and even Guardian. If the based monthly benefit is low (e.g., 2500$), then the mental/nervous benefits is limited to 24 months by all providers. However, if the based monthly benefit is higher (with a higher monthly premium, of course), then the mental/nervous benefits is unlimited (e.g., to age of 65).

So, I wonder if the unlimited mental/nervous benefits should be considered required in the long term disability insurance quote as well? I do not see White Coat Investor's website or previous posts on the long term disability insurance in this forum talked about this mental/nervous benefit explicitly.

Please advise.

Thank you,
Yes they are important, mental/nervous claims are about 10% of all disability claims, which is the third-leading cause of DI claims according to Guardian. The monthly benefit shouldn't have anything to do with whether mental/nervous is limited to 24 months or not. Ameritas always limits the benefit to 24 months. Guardian and Standard are both unlimited (Guardian does have a cheaper option with a limitation). Principal limits to 24 months if you choose the Regular Occupation (i.e. own occupation) definition of disability. Certain occupations like anesthesiologist/ER doctor also require a 24-month limitation.
Thank you, BruDude,

Things may have changed, or I am unaware. But I got Guardian DI quotes of 2500$ monthly benefits from two different brokers. For this monthly benefit of 2500$ (riders: COLA 3%, Enhanced Partial Disability, 180 day elimination period), they both said that the mental/nervous benefit is limited to 24 months. One of them said that if I increase the monthly benefit, I can get the unlimited mental/nervous benefit. Of course, I will have to pay a higher monthly premium for this increased monthly benefit.

Do I miss anything?

BruDude
Posts: 2981
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: Individual Disability Insurance Quote Evaluation Needed

Post by BruDude » Wed Jan 23, 2019 4:22 pm

lmea wrote:
Wed Jan 23, 2019 9:49 am
Thank you, BruDude,

Things may have changed, or I am unaware. But I got Guardian DI quotes of 2500$ monthly benefits from two different brokers. For this monthly benefit of 2500$ (riders: COLA 3%, Enhanced Partial Disability, 180 day elimination period), they both said that the mental/nervous benefit is limited to 24 months. One of them said that if I increase the monthly benefit, I can get the unlimited mental/nervous benefit. Of course, I will have to pay a higher monthly premium for this increased monthly benefit.

Do I miss anything?
They may have quoted you the 24-month limitation but they should be able to quote the exact same coverage with unlimited mental/nervous benefits. I have never heard of the benefit amount having anything to do with the mental/nervous limitation. I just ran a test quote on the Guardian software using the Provider Choice product and it allowed me to put unlimited mental/nervous on a policy with the same benefits - $2500/mo, Enhanced Partial, 3% COLA, 180-day EP.

If you are in CA, they will require a 24-month limitation on mental/nervous, but that still has nothing to do with the benefit amount. It is possible that there is some type of state-specific limitation. The only other thing I can think of is if you are in a lower occupation class, it may be a requirement.

What was the agent's explanation?

Topic Author
lmea
Posts: 16
Joined: Wed Mar 25, 2015 8:06 pm

Re: Individual Disability Insurance Quote Evaluation Needed

Post by lmea » Sun Jan 27, 2019 8:17 pm

BruDude wrote:
Wed Jan 23, 2019 4:22 pm
lmea wrote:
Wed Jan 23, 2019 9:49 am
Thank you, BruDude,

Things may have changed, or I am unaware. But I got Guardian DI quotes of 2500$ monthly benefits from two different brokers. For this monthly benefit of 2500$ (riders: COLA 3%, Enhanced Partial Disability, 180 day elimination period), they both said that the mental/nervous benefit is limited to 24 months. One of them said that if I increase the monthly benefit, I can get the unlimited mental/nervous benefit. Of course, I will have to pay a higher monthly premium for this increased monthly benefit.

Do I miss anything?
They may have quoted you the 24-month limitation but they should be able to quote the exact same coverage with unlimited mental/nervous benefits. I have never heard of the benefit amount having anything to do with the mental/nervous limitation. I just ran a test quote on the Guardian software using the Provider Choice product and it allowed me to put unlimited mental/nervous on a policy with the same benefits - $2500/mo, Enhanced Partial, 3% COLA, 180-day EP.

If you are in CA, they will require a 24-month limitation on mental/nervous, but that still has nothing to do with the benefit amount. It is possible that there is some type of state-specific limitation. The only other thing I can think of is if you are in a lower occupation class, it may be a requirement.

What was the agent's explanation?
Thanks, BruDude,

I got the answer. The agent told me that there are Basic and Premium Policies from Guardian. He actually gave me the Premium quote that had unlimited M/N benefit but he thought he gave me the Basic policy. The other agent gave me the Basic quote for Guardian, and it had 24 month for M/N benefit. This basic had COLA 3%, BASIC partial disability, 180 day EP.

So, I think the Guardian premium policy will have M/N unlimited benefit. The basis policy, on the other hand, will have M/N 24 month benefit. Is it consistent with your quotes?

Thanks,

BruDude
Posts: 2981
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: Individual Disability Insurance Quote Evaluation Needed

Post by BruDude » Sun Jan 27, 2019 10:00 pm

Yes, I would not buy the basic policy though. The “premium” policy is what you want. I have never quoted the basic policy for anyone.

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