Supplemental disability

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Brantley
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Supplemental disability

Post by Brantley » Sun Jun 30, 2019 6:40 pm

Hey folks,

Who here has a supplemental private disability policy on top of your employer policy? I do not see many recent posts on the site, and limited coverage on news sites. Seems to be topic not very much talked about. Wife and I have a policy through Principal and the Standard. Employer policies are just ok (~65% before tax). Please share your thoughts. Also, why is this topic rarely talked about in the workplace, by financial advisors, etc?

EDIT: I am not looking for advice on how to pick a policy. I have already done my research prior to purchasing our policies. More specifically I would like to take the temperature of others on the forum.
Last edited by Brantley on Mon Jul 01, 2019 8:00 am, edited 1 time in total.
~Brantley

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Kenkat
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Re: Supplemental disability

Post by Kenkat » Sun Jun 30, 2019 8:23 pm

There was a fairly recent post here:

viewtopic.php?f=2&t=283912

It it does come up occasionally. I have a supplemental policy (two actually) in addition to my employer provided coverage.

People tend to focus on life insurance because I think that is the classic bad news scenario, but disability is a real risk as well.

Silk McCue
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Re: Supplemental disability

Post by Silk McCue » Sun Jun 30, 2019 8:30 pm

I searched this site and found this post suggested
To my knowledge, the top-tier carriers are Guardian, Principal, Standard, and Ameritas. Guardian is considered the best if you can get it. I don't know of any general way to rank the others. My policy is with Standard, and I've had a good experience so far.
viewtopic.php?t=217324#p3349245

Take time to read the Wiki to learn what you likely don’t yet know about these policies. You will be a more informed consumer.

https://www.bogleheads.org/wiki/Disability_insurance

Cheers

rj342
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Re: Supplemental disability

Post by rj342 » Sun Jun 30, 2019 8:33 pm

How likely is the scenario that you qualify for payment your workplace, or supplemental, long term disability policy, but NOT Social Security?

Here's a FIRE related question too...

If you are pseudo FIRE, as in ideally should not completely stop working yet, but in that mode where you could downshift to work part of the year, or take a whole year off as a sabbatical before resuming regular employment --- is any sort of disability insurance possible?

IOW partially insuring against loss of my ability to work again if desired/needed before normal retirement age?
Could you leave an employer voluntarily and keep LTD for a while through COBRA?

Edit -- Hmm, older but found this
https://www.ebcflex.com/Menu/Resources/ ... -Rule.aspx

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Brantley
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Re: Supplemental disability

Post by Brantley » Sun Jun 30, 2019 9:30 pm

Silk McCue wrote:
Sun Jun 30, 2019 8:30 pm
I searched this site and found this post suggested
To my knowledge, the top-tier carriers are Guardian, Principal, Standard, and Ameritas. Guardian is considered the best if you can get it. I don't know of any general way to rank the others. My policy is with Standard, and I've had a good experience so far.
viewtopic.php?t=217324#p3349245

Take time to read the Wiki to learn what you likely don’t yet know about these policies. You will be a more informed consumer.

https://www.bogleheads.org/wiki/Disability_insurance

Cheers
Thanks - I did my research before buying the policies and understand how they work. However, I’m looking to see how people view the concept in general, as well as my other questions.
~Brantley

Startled Cat
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Re: Supplemental disability

Post by Startled Cat » Sun Jun 30, 2019 11:08 pm

I have a supplemental disability policy. It was offered to all employees covered by my PEO (TriNet HR) meeting certain criteria. Because of the way the policy was marketed through my employer, there was no underwriting requirement, and the amount of supplemental coverage offered was more than I think I would have been able to get on the open market (already having a basic group disability policy that I can't opt out of). This made me go with this policy rather than looking at other alternatives.

They say disability policies are sold, not bought, and I think that was true in my case. Until I saw this offer, I had a very limited understanding of disability insurance and why my group coverage could be inadequate. Being offered supplemental insurance caused me to go research it, and against my initial expectations, conclude that it was worthwhile. Reading posts on this site helped me learn a lot - especially BruDude's posts (full disclosure: he sells insurance, so his posts should be read with that perspective in mind).

OP, did you have any specific questions about supplemental disability insurance?

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Brantley
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Re: Supplemental disability

Post by Brantley » Mon Jul 01, 2019 4:13 am

Startled Cat wrote:
Sun Jun 30, 2019 11:08 pm
OP, did you have any specific questions about supplemental disability insurance?
Only what is in my original post. Trying to take people’s temperature on the subject.

I have a friend who is in investment management who didn’t see any value in it. FIL who is generally financially savvy and mostly a boglehead had a similar response. I am curious to see how others feel.
~Brantley

Silk McCue
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Re: Supplemental disability

Post by Silk McCue » Mon Jul 01, 2019 5:32 am

Brantley wrote:
Sun Jun 30, 2019 9:30 pm
Thanks - I did my research before buying the policies and understand how they work. However, I’m looking to see how people view the concept in general, as well as my other questions.
Sorry. Your original post left much to interpretation as other replies provided reflect. You might want to edit the post and make it clearer for others that might come along what exactly it is you are seeking.

Cheers

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Brantley
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Re: Supplemental disability

Post by Brantley » Mon Jul 01, 2019 8:01 am

Silk McCue wrote:
Mon Jul 01, 2019 5:32 am
Brantley wrote:
Sun Jun 30, 2019 9:30 pm
Thanks - I did my research before buying the policies and understand how they work. However, I’m looking to see how people view the concept in general, as well as my other questions.
Sorry. Your original post left much to interpretation as other replies provided reflect. You might want to edit the post and make it clearer for others that might come along what exactly it is you are seeking.

Cheers
I edited my post. Would you mind sharing your thoughts?
~Brantley

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Brantley
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Re: Supplemental disability

Post by Brantley » Tue Jan 14, 2020 5:43 pm

Bumping this post.

Again, I’d like to get folks thoughts on why this seems to be a topic that I do not see much discussion on in the media, on the web, in finance journals, etc. The cost of supplemental insurance is fairly high. I understand there is large variability in that cost. I ran this by a friend of mine who is a financial adviser for a small shop, and it’s interesting to me that he doesn’t agree with the concept of paying for supplemental insurance (cost vs benefit).

I have done some extensive searching, and most of the articles I have turned up are primarily from companies who sell disability insurance.

I purchased a policy for my wife and myself through Principal and the Standard and I am happy with the policies.
~Brantley

BruDude
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Re: Supplemental disability

Post by BruDude » Tue Jan 14, 2020 10:23 pm

Brantley wrote:
Tue Jan 14, 2020 5:43 pm
Bumping this post.

Again, I’d like to get folks thoughts on why this seems to be a topic that I do not see much discussion on in the media, on the web, in finance journals, etc. The cost of supplemental insurance is fairly high. I understand there is large variability in that cost. I ran this by a friend of mine who is a financial adviser for a small shop, and it’s interesting to me that he doesn’t agree with the concept of paying for supplemental insurance (cost vs benefit).

I have done some extensive searching, and most of the articles I have turned up are primarily from companies who sell disability insurance.

I purchased a policy for my wife and myself through Principal and the Standard and I am happy with the policies.
Most people don't understand the shortcomings of group disability insurance in the first place. They just think "oh I have that through my employer already" without doing any research. They have no idea that it covers $0 of their bonus income, $0 of their RSU's (tech companies like FB/Amazon pay a huge portion of employee income as RSU's), $0 of their employer retirement contribution, that benefits are reduced by other income sources, etc.

Most people also fail to realize that they aren't buying "$5,000/month" worth of insurance which sounds like a small number compared to the thousands of dollars in premiums. They are literally buying millions of dollars in potential protection. $5,000/month x 12 months x 35 years = $2.1 million without even factoring in cost of living adjustments. Now look at a physician with a $10k/month, $15k/month, or $20k/month benefit and you are now looking at $4-8M in potential payouts. With a COLA rider and a $20k/month benefit you are potentially looking at $15M over 35 years. With a $10k/month benefit you're looking at ~$7.3m in benefits. You only need a $225k income to qualify for $10k/month. Most physicians make far more than that, especially specialists as their careers advance.

How much does a $15M life insurance policy cost to cover you for 35 years? A lot, even for a health 30 year old. That's not to say that everyone will get paid nearly that much, but that is the protection that you're buying.

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