MMR: insurance stuff

[niq]

Something actually MMR! msniq & I are trying to be grownups lately. Insurance is on the list for this week.

Other than for pregnancy-related reasons, does anyone pay for a disability policy outside of what your employer offers? What motivated you to get more coverage? Where did you shop for it? Since msniq and I both bike to work, we're thinking extra wage-replacement insurance might not be a bad idea.

msniq can buy really cheap life insurance through her employer, with a really high cap ($750K, most employers I've worked at cap it at like $250K or $500K). It's about 1/4th or 1/3rd the cost of a 30-year term policy. If she changes jobs she can convert it to a whole life policy. But everyone here (and other places) says that whole life policies are usually a bad idea. Would you shop elsewhere for a policy or buy the cheap employer-based life insurance? If I had to guess, I would say the odds she stays where she is for 10 years are about 50-50.

[boiler717]

I would up the employer policy but also get a fairly large policy not tied to work as well.

[genet313]

I don't but my parents had (have) one on my dad.  They took it out when he was young and healthy, but the sole earner.    And then my parents started their own business, so it probably morphed into "key man" insurance as well. 

Anyhoo, my dad had Stage 4 colon cancer at 49, then as a result of cancer treatments got kidney disease and had to have a transplant, and now sadly is in kidney failure again.   So sadness.  But my parents have collected on that policy 3x now...so it's definitely paid off for them.  

Obviously you don't hope to collect, but given that it's cheap and has a high cap, I'd seriously consider it in your case. 

[Deleted]

In my experience whole life is about 8-10x what term costs, so I wouldn't be banking on that just in case mrsniq decides to leave her job.

[Susie]

We both carry long term disability insurance (through MetLife). Mine is a higher value policy because the loss of my income would be more financially catastrophic. I think it's a must for anyone with large SLs or other fixed costs that can't be downsized in the event of a major change in life circumstances. It was especially important to me in view of the potential for a serious cycling accident. If I died in an accident, my SLs would be forgiven, my term life policy would pay out, Calvin would get all my retirement savings, and he'd actually be sitting relatively pretty.  If I became long-term or permanently disabled, my SLs would remain, I'd probably incur significant expenses for care/rehab, my retirement contributions would be suspended, and we'd desperately need income replacement.

I also have a supplemental short term disability policy, but that is mostly for maternity leave, and we both have 30 year term policies.

I would probably pass on the employer term policy option in your case, because I would not want to be relying on that for coverage if she wanted to change jobs (which sounds as likely as not). If she stays, great, you win. But if she doesn't, whole life is really pricey, and a new term policy will have higher premiums due to older age, and any savings in the interim years (over a separate policy) would likely be lost.  The only way I see that working well is if she did 30 year term through her employer now, and if she left, canceling the policy and buying a 20 year term policy independently.  The shorter term might be enough to make the cost more equivalent.  I'd suggest getting quotes and running numbers on that.  It would be less risky though to just buy a 30 year term policy independently.  Compared to LTD they're really pretty reasonably priced.

[msmerymac]

We took out long term disability (accident or illness, own occupation) on my husband for 40% of his salary, which would top off his 60% LTD policy he gets for free through work.

We also have independent, individual life insurance - 10x+ our annual incomes.

We didn't take out STD or LTD for me because 1) we can weather through with savings until the LTD kicks in (can't remember the exact term, but it's no more than 3 months until we would get that) and 2) I work from home and am a contractor. I had a severe back issue last year, but I was still able to work from home. I would not likely have been able to work from an office. If I change jobs or ever don't work from home, we'll re-evaluate.

If you do disability, you'll want to make sure you're protected for both accidents and illnesses. Also, you'll want to make sure it's your OWN occupation, not any occupation. Some policies switch after two years to any occupation. Some are 100% any occupation. So they can tell you that, even though you've had a brain injury, you're qualified to bag groceries. Or even though you're mobility impaired, at least you can do remote customer service from home or something.

The LTD we got covers my husband until age 67. It's about $53/month.

Also, do you have an umbrella policy? That can kick in for medical coverage in case of a bike accident.

If I were your wife, I'd take out the work life insurance policy. Then I'd probably take out a cheaper, smaller individual policy elsewhere. If and when she leaves, she can work with them to increase the amount to what she needs if she needs it. Also, there's a certain threshold (it might be $100k, though) where you don't need the physical tests.

[sadlebred]

I would definitely get STD. I was in a situation a few years ago where I had a complication from surgery, was hospitalized for a week, and nearly qualified for my STD I pay for through my employer. It's usually not expensive through an employer. I have an independent LTD policy. They are expensive if you don't get them through an employer or group, but they are worth it.