Guardian vs Principal for disability insurance

[storgendibal]

Hi all,

Long time lurker, first time poster. I've been researching and shopping for disability insurance. I have read through the Wiki and a number of posts talking highly of Guardian. I have approvals from both Guardian and Principal, both are true own occupation (via a rider in the case of Principal), non-cancellable, coverage till 65 (67 for Guardian), residual disability benefit, 6% COLA, etc.

However, the Guardian benefit amount came back to only half of the Principal benefit (16K vs 8K), because Guardian is discounting my employer provided disability coverage to determine the benefit amount. Guardian also did not approve Future Increase Option or Automatic Benefit Enhancement, so if I change employers in the future or lose employer provided coverage in the future, I do not have the option of increasing coverage through Guardian.

Overall, it seems like Principal is better on paper, but given how much support there is for Guardian on this forum, I'm not sure if there are other things I am missing or should ask my broker about. Any advice is very appreciated!

[BruDude]

Principal also takes your group LTD into account so something is missing here. Was the group coverage disclosed to Principal? I don’t see how they can possibly be that far apart.

What was the reason Guardian didn’t approve the FIO/ABE riders?

[storgendibal]

Thanks BruDude. AFAIK, Group LTD was also disclosed to Principal. My broker said that Guardian will only approve to a max of 25K and my group LTD is about 17K.

[Rex66]

Besides what bru mentioned, guardian if I’m not mistaken has better mental illness coverage

Personally if significantly cheaper, I’d be fine taking princ

Guardian will hound you for life to purchase whole life as well.

[BruDude]

Thanks BruDude. AFAIK, Group LTD was also disclosed to Principal. My broker said that Guardian will only approve to a max of 25K and my group LTD is about 17K.

The broker is wrong. Are you using the same broker for both applications or two different ones?

Guardian has higher limits than Principal, they go up to $30k/month and Principal only goes up to $20k/month. The group LTD also isn’t calculated that way. There’s a formula that discounts your group coverage but it’s not a direct offset. Like I said there’s something missing here, check your application with Principal. There is no way they can be that far apart if the same info was disclosed to both.

Edit - I will add that if your income is heavily based on RSU's, the numbers could be accurate. Guardian limits the RSU income to a max of 25% of the RSU's paid, while Principal will count 100% of them if paid for at least two years. In that case I would go with the higher benefit amount.

[Chardo]

Thanks BruDude. AFAIK, Group LTD was also disclosed to Principal. My broker said that Guardian will only approve to a max of 25K and my group LTD is about 17K.

The broker is wrong. Are you using the same broker for both applications or two different ones?

Guardian has higher limits than Principal, they go up to $30k/month and Principal only goes up to $20k/month. The group LTD also isn’t calculated that way. There’s a formula that discounts your group coverage but it’s not a direct offset. Like I said there’s something missing here, check your application with Principal. There is no way they can be that far apart if the same info was disclosed to both.

Depending on age and occupation, Principal can go up to $35k.

[BruDude]

Thanks BruDude. AFAIK, Group LTD was also disclosed to Principal. My broker said that Guardian will only approve to a max of 25K and my group LTD is about 17K.

The broker is wrong. Are you using the same broker for both applications or two different ones?

Guardian has higher limits than Principal, they go up to $30k/month and Principal only goes up to $20k/month. The group LTD also isn’t calculated that way. There’s a formula that discounts your group coverage but it’s not a direct offset. Like I said there’s something missing here, check your application with Principal. There is no way they can be that far apart if the same info was disclosed to both.

Depending on age and occupation, Principal can go up to $35k.

Good to know, first I've heard of that....and for some reason it's not in the underwriting guide or the software and you have to call Principal yourself or have your agency request the quotes for anything over $20k. Stupid way to do business, don't know why they want to make it some kind of secret. Either way that doesn't change the benefit calculation or explain the disparity in the two benefit amounts.

[storgendibal]

Thanks, I'll check the application. My income is heavily based on RSUs (my salary and cash bonus are roughly 15% of my total compensation; the remainder is in public company RSUs that vest quarterly).

Thanks BruDude. AFAIK, Group LTD was also disclosed to Principal. My broker said that Guardian will only approve to a max of 25K and my group LTD is about 17K.

The broker is wrong. Are you using the same broker for both applications or two different ones?

Guardian has higher limits than Principal, they go up to $30k/month and Principal only goes up to $20k/month. The group LTD also isn’t calculated that way. There’s a formula that discounts your group coverage but it’s not a direct offset. Like I said there’s something missing here, check your application with Principal. There is no way they can be that far apart if the same info was disclosed to both.

Edit - I will add that if your income is heavily based on RSU's, the numbers could be accurate. Guardian limits the RSU income to a max of 25% of the RSU's paid, while Principal will count 100% of them if paid for at least two years. In that case I would go with the higher benefit amount.

[storgendibal]

This is good to know, thanks!

Thanks BruDude. AFAIK, Group LTD was also disclosed to Principal. My broker said that Guardian will only approve to a max of 25K and my group LTD is about 17K.

The broker is wrong. Are you using the same broker for both applications or two different ones?

Guardian has higher limits than Principal, they go up to $30k/month and Principal only goes up to $20k/month. The group LTD also isn’t calculated that way. There’s a formula that discounts your group coverage but it’s not a direct offset. Like I said there’s something missing here, check your application with Principal. There is no way they can be that far apart if the same info was disclosed to both.

Depending on age and occupation, Principal can go up to $35k.

[BruDude]

Thanks, I'll check the application. My income is heavily based on RSUs (my salary and cash bonus are roughly 15% of my total compensation; the remainder is in public company RSUs that vest quarterly).

Thanks BruDude. AFAIK, Group LTD was also disclosed to Principal. My broker said that Guardian will only approve to a max of 25K and my group LTD is about 17K.

The broker is wrong. Are you using the same broker for both applications or two different ones?

Guardian has higher limits than Principal, they go up to $30k/month and Principal only goes up to $20k/month. The group LTD also isn’t calculated that way. There’s a formula that discounts your group coverage but it’s not a direct offset. Like I said there’s something missing here, check your application with Principal. There is no way they can be that far apart if the same info was disclosed to both.

Edit - I will add that if your income is heavily based on RSU's, the numbers could be accurate. Guardian limits the RSU income to a max of 25% of the RSU's paid, while Principal will count 100% of them if paid for at least two years. In that case I would go with the higher benefit amount.

If your income is that skewed towards RSUs then that would explain the benefit amount difference. In this case I’d go with Principal to get the larger benefit.

[storgendibal]

Thanks for the advice and yeah leaning towards Principal. Is there any downside in going with a lower coverage amount with Principal and relying on Principal's the Future Increase Option in case I leave my current employer? Or better to just buy as much coverage as possible right now?

[BruDude]

Thanks for the advice and yeah leaning towards Principal. Is there any downside in going with a lower coverage amount with Principal and relying on Principal's the Future Increase Option in case I leave my current employer? Or better to just buy as much coverage as possible right now?

You have to purchase at least 75% of the amount you're eligible for with Principal in order for them to offer the rider, otherwise they won't include it. The downside to waiting to buy more is that the rate is locked at the age you increase the coverage, so the longer you wait the more you would pay every year for the remainder of the time you keep the policy. Keep in mind that with Principal when your 3-year increase option comes up you MUST accept at least 50% of any increase that you're eligible to purchase, otherwise they will terminate the rider and not offer any further increases.

[Rex66]

I’d definitely buy as much up front

Frankly if that was your strategy then I’d say buy as much and don’t get the income rider but I’d recommend getting the most and increase rider

[mega317]

Is your employer coverage own-occupation?

I think simply you should get the largest policy.

[storgendibal]

Thanks everyone, this thread and community is amazing. Employer coverage is own occupation for only two years.

[Rex66]

That’s typical by the way assuming it’s own occ at all

[mega317]

Yes, therefore should be completely ignored for your own planning.

[storgendibal]

Hi all, sorry to bump this thread again. I'm going through the Principal definition of true own occupation and it doesn't quite make sense to me. The basic contract is clearly modified own occupation, and then I have a rider that is supposed to enhance it to true own occupation. However, the rider's verbiage states "... and you are working in another occupation". Ie, I have to be working in another occupation to qualify for total disability? That seems wrong does it not? Or is it that the basic clause and rider clause work together to cover all my bases?

Basic contract

1. During the Your Occupation Period You are not able to perform with reasonable continuity the substantial and material acts necessary to perform Your Occupation in the usual and customary way and You choose not to work at any occupation.

2. After the Your Occupation Period You are not able to engage with reasonable continuity in any occupation in which You could reasonably be expected to perform satisfactorily in light of Your age, education, training, experience, station in life, and physical and mental capacity.

If You choose to work at any occupation, You will not be considered Totally Disabled under this policy, but You may qualify for Residual Disability benefits if this rider is attached to Your policy


Regular Occupation Rider

TOTAL DISABILITY during the Your Occupation Period means, that as a result of Injury or Sickness You are not able to perform with reasonable continuity the substantial and material acts necessary to perform Your Occupation, You are not Working in Your Occupation, and You are Working in another occupation.

[Chardo]

Hi all, sorry to bump this thread again. I'm going through the Principal definition of true own occupation and it doesn't quite make sense to me. The basic contract is clearly modified own occupation, and then I have a rider that is supposed to enhance it to true own occupation. However, the rider's verbiage states "... and you are working in another occupation". Ie, I have to be working in another occupation to qualify for total disability? That seems wrong does it not? Or is it that the basic clause and rider clause work together to cover all my bases?

Basic contract

1. During the Your Occupation Period You are not able to perform with reasonable continuity the substantial and material acts necessary to perform Your Occupation in the usual and customary way and You choose not to work at any occupation.

2. After the Your Occupation Period You are not able to engage with reasonable continuity in any occupation in which You could reasonably be expected to perform satisfactorily in light of Your age, education, training, experience, station in life, and physical and mental capacity.

If You choose to work at any occupation, You will not be considered Totally Disabled under this policy, but You may qualify for Residual Disability benefits if this rider is attached to Your policy


Regular Occupation Rider

TOTAL DISABILITY during the Your Occupation Period means, that as a result of Injury or Sickness You are not able to perform with reasonable continuity the substantial and material acts necessary to perform Your Occupation, You are not Working in Your Occupation, and You are Working in another occupation.

Yes, the basic clause and the rider clause work togetherand cover all the bases. If you are unable to work and not working, you are covered by the basic policy. If you are unable to do your regular occupation and choose to work at a different job, you are covered under the rider.

[BruDude]

As long as you have the Regular Occupation rider on the policy it is the same as other companies' true own occupation definitions. The only thing it is missing is Specialty-specific language if you are physician.

[storgendibal]

Thanks you guys! So grateful for the advice. I am not a physician (tech executive) so I think I'm good!