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Household Finances

Disability Insurance

19 years ago

So, I'm putting my house on the market. It needs more work than I'm willing to put into it and its not where I want to grow old.

I'll end up with a larger mortgage and thats o.k. I have one child in college and I'm newly single. That means that I am the sole breadwinner. My only worry is what happens if I get sick. Do you think disability insurance is a good idea? And if so, what are good firms out there?

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Comments (12)

gina_in_fl
19 years ago
Gotta think about your general health? Occupational Hazards?.. Need more info to get better replies
steve_o
19 years ago
Disability insurance is a great idea for just about anyone (and, no, I don't sell insurance or have a family member who does). You are far more likely to be injured at work than killed. It also is more likely that you will injured in a way that prevents you from doing your own job, for which you are (ostensibly) qualified and experienced. Think about the pay cut you probably would have to take if you were to start over in a new line of work that didn't require as much skill or experience as you have. Could you afford to do that?

Most disability coverage issued through employers requires you to work at whatever skill level and income you can find. Similarly, while Social Security provides some disability income, they do so only if you are totally disabled. If you were a neurologist hauling in $300,000 a year but your disability still allows you to put pencils into a box (earning $11,000 a year to do that), you won't get most group disability coverage or SSDI.

"Own occupation" disability insurance is the kind of insurance you hope you'll never need -- but will find irreplaceable if you ever are unable to work, either short-term or long-term.
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Hi again, Sue, Our system is far from perfect. It's a multi-billion dollar enterprise ... and if you have a pot of honey sitting in the yard, don't be surprised if you attract a bunch of bees to go buzzing around! The system is a national one, largely ruled by the national government, and partly funded by them (but on a drastically reduced basis in recent years) - but administered provincially. The government-related agency is the only payer allowed, and I understand that in most provinces a doctor can choose to practise outside of that system, but if he does so, he must practise entirely that way, that he can't be billing the provincial system for part of the service that he offers (to avoid having him bill the lucrative stuff directly). The chief problem is that for many elective procedures, there is a long waiting list. When one has a painful hip, the prospect of waiting for more than a year to have replacement is not a pleasant experience. But I don't think that we use our operating rooms on a 24 hour basis, either. And they have beds (or O.R.s) shut down, sometimes - shortage of staff ... or shortage of money. Some people travel to the U.S. for care, at far higher cost, and some travel to such as India, where quality care is available, and at much lower cost, for people who can't wait in the line-up here (or whose service isn't covered, e.g. facial tucks - but they can be done here: private-pay). Sometimes (usually a rather small) part of their costs are recoverable from the provincial plan when they've gone elsewhere for service. While there are a good deal of tears shed over the shortage of staff, no one seems to get much out of breath running hard to get some trained people from other parts of the world to become licensed here: quite a few Ph.D.'s from various third world countries are driving cabs, here. Though a large number of Canadians can't find a family doctor, quite a few of us figure that the government isn't enthused about empowering a lot more doctors - which means more bullet holes in the rain barrel, depleting the water even more rapidly. And many of us feel that quite a few procedures currently restricted to doctors could well be carried out by nurses ... but no way are the medical associations going to stand still for any kind of nonsense like that being put into place! Plus - there's a shortage of nurses, as they cut back on training a while ago, and many of our grads move to the U.S. Same with our doctors. Seems to me that such people should reimburse for much of their training. But - we're just as bad - we seduce many such trained people from various less developed parts of the world, where such trained people are scarce and precious, and losing them something of a disaster. Also, many nurses work short hours per week per institution, in order to avoid the need to pay benefits to full-time workers. And any fool knows that a patient needs to be seen successively, day by day, by the same nurses - a lot of incipient problems can be forestalled by an observant nurse ... provided that s/he deals with the patient daily. Also - the medical system, in whatever country, is a bottomless pit. My old step-uncle, who died in his mid-80's a few years ago, had had three hip replacements. Such things were unheard of 50 years ago. And many patients undergo heart by-pass procedures in recent years: it's routine, these days. And we replace hearts, lungs, liver, kidneys, etc. (everything except heads?). I think that I heard a while ago that when a heart transplant takes place, something like 25 people are in the operating room. We old farts never heard of having MRI tests, CAT scans, etc. - but now they are reasonably commonplace (but still expensive). And they are learning of more complex (read "expensive") procedures day by day. Many Canadians are pleased with the system that we have. And there is quite a large number who complain about it. The main complaint is that people should be allowed to pay for their care, outside of the system, should they choose. To which some reply that it is possible, now - just convince some doctors that they should practise on a private basis, with all of their patients paying them directly. One of the major problems is ... ... that if a doctor sends in a request for payment for a visit, the payer must pay him ... or prove fraud. Many docs put patients through pretty quickly. And over-prescribe drugs ... partly to get the gal/guy off his/her back ... quickly? Many European countries have, generally speaking, quality health care, at much lower costs per capita than the costs under our system. And your sustem costs a lot more than ours, per capita ... and a substantial number of your people aren't covered, and do get some care, but many say that it's not first class. I'm thankful that on my occasional visits to my doc, for regular (if somehat infrequent) physical exam, he doesn't give me any indication that he's under time pressure. But we patients are aware that most of us sat for an hour or so after the time assigned to us, as well. I am mightily thankful that I've had almost no contact with the medical system for many years - haven't taken a pill in 30 years at least, I think. When my ex- (named Sue, by the way) was suffering on a downward trail with cancer a few years ago, our adult children felt that they had no complaint whatever with the care that she received. She'd been head of food service in a major local psychiatric hospital for 20 years (and ironically ... it was her gut that did her in!) and whether that enabled her to receive special treatment I have no idea, but I didn't hear any whisper of such a thing from the offspring. Good wishes to you and yours - and I hope that the New Year brings many pleasant surprises. ole joyful
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Other things being equal, many of us prefer to get life, and possibly also disability insurance, related to paying a mortgage off on our own as a separate contract. The mortgage insurance's beneficiary is the bank, not the mortgage holder, who, though paying the premium, has no flexibility in case of need. The amount of coverage decreases over the years, as it covers only the portion of the mortgage remaining unpaid, while usually for a similar cost (sometimes lower), a mortgagee can get regular term life insurance for the full amount originally owing on the mortgage ... and it usually stays at that level throughout, if they so choose. Premium rate may increase at the end of the agreed term, if it is shorter than the years that the mortgage is to run. If premium rates are comparable, if the mortgagee dies the amount of benefit making up the difference between the original amount owing and the amount remaining owing at the time (which they would likely pay to the bank to retire the mortgage) would be really helpful to the survivors. It's wise to carry disability insurance, as well, as there's a far greater possibility of long-term disability (about 4 times) than of death during one's years of employment ... lacking employment income, how does one pay mortgage should s/he become disabled? Lacking a will ... no problem ... as long as the owner of the family's assets ... remains alive. Suppose someone were to come to your house tomorrow and, reading from a clipboard, ask you what your family owns, then say that this and that was to be done with each of the various pArts of it. As you listened, you'd likely object strongly, sputteringly saying, "But ... but ... we don't want our things and money to be dealt with that way!!". That person would just be telling you what your state's rules are, that would come into effect ... ... if the owner of the assets dies without a will!! So - get the will in place ... before you die. Can't do it after!! ole joyful P.S. Confession time. I'm close to 80 ... and I don't got one, either. Stupid. My kids'd get the stuff ... but they'd get a lot less, after all of those admin. costs. And they'd get the stuff later. And the charities'd get ... nothing! o j
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Okay, I've been reading this thread and not responding to it b/c I don't want to have it come out wrong. I can't keep quiet any longer. I agree with many statements above. I would like to say these things: If you haven't already filed bankruptcy-DON'T do it. Your husband is like a child and you are not teaching him any good sound financial responsibility by bailing him out all the time. You've bailed him out 2x already and then signed for a loan for someone who has no credibility. Doesn't pay bills and loves to spend....HELLO that was not a smart move but you have to move ahead...can't look back. You guys created these debts you have to pay them. Your biggest expense next to your mortgage is your student loans....in almost all cases they can't be discharged. So you will still end up having to pay that. You've already stated you need your cars, so you'd be keeping those. You have to pay back your 401k loan...So basically you'd be trying to file off your 60k in CC and your SBA loan? Good luck.....you are going to ruin your credit....for a very long time IF you even get your bankruptcy granted with the new laws, you still may have to pay some of that back. What happens if you file and then have poor credit, no credit cards and then your water heater goes, or your furnace? You have no cards to pay it, no savings to pay it and no money to pay it. So you skip car payments to pay it then can't catch up and car gets repo'd and you have no way to work, lose your job, lose your house. Sounds extreme but it could happen. There are lots of people that are ONE crisis away from poverty and homelessness. I would set a budget, stick to it. Kick DH a$$.....if he's a photographer, start going to bridal shows get some clients offer better package pricing. Brides are bargain shoppers, if you have the best price and great photos you are hired. Hit the road and take photos of things when he isn't working. Enter photo contests w/cash prizes. Put your name out there. Free advertising is everywhere!!!! Stop crying over it and FIX IT!!!! Also, if you can sell stuff.....like 10 chairs to buy 4...then be smarter with the money. Sell 6 keep 4 and pay some bills. Take ALL the cards away from DH and give him a weekly allowance and that's it. If he's unhappy with that let him know that he did it to himself and needs to learn the hard way. Money doesn't grow on trees and the credit tree just got cut down. NO MORE MONEY......no more excuses. You made these bills now you have to lay in the "bed of bills" for a while. Once you recover from this you will feel a sense of relief and feel like a better person that you "took the bill by the horns" and paid everything down. You did the right thing and not the easy way out. Anyway, I'm all fired up, I hope this doesn't come across as insensitive. It's time to put your husband in his place and if he's not on board then he's got to find someone else to take advantage of financially b/c it's not gonna be you.
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lynnemarie
19 years ago
You will probably have workers' compensation (occupational coverage) if you're injured on the job via your employer (most states mandate the coverage).

Your employer may also have group long-term disability (LTD) coverage as part of its benefits plan. LTD will cover you for any disability (non-occupational) that causes your inability to work. Almost always protected by your own occupation for a couple of years and then at least your education, training & experience. The neurosurgeon would never be required to fill pencils or flip burgers under an employer's group plan (or most individual plans either!)

If you don't have LTD through your employer, it will be very expensive & you need to be healthy to get an individual policy through an agent. Although disability insurance is so important, it may not be your top priority right now -- but get some quotes and see if you can afford it.

Agree SSDI will only pay for total & permanent disability, usually takes lawyer involvement to get these payments if not permanent disability.

Lp
azzalea
19 years ago
Given your stage of life and responsibilities, have you considered mortgage insurance? At the very least you would want that, I'd think--and we've known several people who it saved when they became sick, or the husband died before the mortgage was paid off.
steve_o
19 years ago
Almost always protected by your own occupation for a couple of years and then at least your education, training & experience. The neurosurgeon would never be required to fill pencils or flip burgers under an employer's group plan (or most individual plans either!)

I guess things have changed in the 20 years or so I've been in the workforce. When I was first presented with my employer's disability plan lo those many years ago, it was made pretty clear that my income level and skill set had little to do with whether I was declared disabled. That's when I went out and got my own policy. I'm much more comfortable knowing that if, for some reason, I can no longer be an IT geek, I won't be watching some machine populate circuit boards for minimum wage.
bonelady
19 years ago
With your life changing and a new home in your future, your first stop should probably be a financial planner who should evaluate your total insurance and financial plan.
lynnemarie
19 years ago
Look at the definitions in your LTD booklet & you should see something like: "Disabled means that b/c of your injury or sickness, you cannot perform the material duties of your own occupation for ___ months and thereafter, cannot perform the material duties of any occupation for which you are reasonably fitted by training, education or experience". Very typical for past 20 yrs, haven't seen any definition in group plan that doesn't protect you by training, education or experience.

That said, group contracts have a lot more restrictions these days. Want to get you back to work! Individual contracts have always had more bells & whistles.

Lp
saggysmom
19 years ago
If you think about it your ability to earn an income and sustain your life is your most valuable asset. People spend more money protecting their material posessions (home, cars, etc.) than they do protecting their income. The present value of your income stream can be worth hundreds-of-thousands or even millions over the course of your working life. The problem is that people feel like they will be wasting their money on insurance if they never have to use it... but what if they do?
And, yes, I am a financial professional and in my 12 years in the business I have seen more than a few instances where people wished they had purchased all types of insurance when they had the chance. Looking back some people realize they were penny wise and pound foolish.
My suggestion is to look at where your position would be worse: paying an insurance premium while you are working, or having no income at all if you can't.
mzdee
Original Author
19 years ago
Thanks to all of you. You've given me a lot to think about and I'm researching all of my options.
asthma
19 years ago
I got one thing to say...GET IT! Back in Januaury 22, 1998 while I was working for a textile company on the way home (5 minutes from my house) I was run over by a drunk driver. I was a passenger in the front of the car and a drunk driver was in a big 4x4 truck and literally drove over the top of the car!He messed up the right side of my body pretty well but I won't get into all that. In the meantime, the new job I had started 2 months before had offered me disability insurance and I said no like a fool. No insurance, no income.Think hard.
blessedbyrussia
19 years ago
What if your self-employed?
steve_o
19 years ago
What if your self-employed?

You can buy disability insurance through other insurers. My personal policy is through UnumProvident (they bought Paul Revere Insurance, which held the policy originally). Call an independent insurance broker and ask about your options.

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