Long Term Disability Insurance: Purchased
After much research, discussion, and weighing a myriad of options, yesterday my spouse signed the contract for long term disability insurance for himself. We chose a 180 wait period policy that in guaranteed renewable until age 65 through MetLife. There were a number of factors that contributed to our decision and how we chose that policy through that company.
Originally, we contacted several companies, and then chose to have quotes done through three - Guardian, Principal, and Met Life. The Guardian policy ended up the most expensive, and the MetLife one the least expensive. That isn’t the only reason we chose the MetLife policy, but after careful review of each policy (including getting sample policies from each company) it was the final deciding factor, because the policies were in effect, identical.
Why was Met Life’s the least expensive? My spouse is a computer programmer, and falls generally into the “4″ risk class (the higher the number, the lower the risk). MetLife however breaks the 4 risk class into subclasses 4, 5, and 6 - and my spouse’s occupation is a 6. Which lowers his premium even more. So per month, we save $15 over the Principal policy and $25 over the Guardian one. Which over the next 30 years… adds up.
In total, we are paying $68.87 a month to cover 70% of my spouse’s salary. We have the option of paying monthly (which we chose) or annually, and annually would save us $26 a year. We want to pay annually, but right this second can’t work that into our budget (we’re still working in the extra monthly premium in fact) but our goal is in the next two years, get to a point where we can make this an annual expense.
I previously discussed the optional “return of premium” rider and we in fact did not choose to have that added to our policy. As many of you pointed out, insurance is insurance and not an investment vehicle, and in my heart I thought it was a bad idea but I couldn’t articulate why when on paper it seemed like it would work out. But we had been leaning against it anyway because of the steep raise in premium so talking about it and getting feedback just cemented what I had been feeling all along.
So now my spouse has disability insurance, pending his successful physical. The coverage is effective today and we paid our first month’s payment, but if for some reason he is disqualified, we would get a refund of the premium we paid. Check one item off the ever growing list of “things we need to do to cover our financial bases”. On to actually dealing with the wills… we did write them, but have we gotten them notarized? Um, no. I think we might just throw in the towel and go to a lawyer…
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August 15th, 2008 at 9:31 am
Congratulations! Many people don’t realize the need for this coverage and it sounds like you really educated yourself to make an informed decision.
August 15th, 2008 at 2:19 pm
Good affordable choice!
Glad you got it covered.
Since you’ve already got the hard part of the wills done (figuring out the who, what, where’s) it shouldn’t cost too much to get the lawyer to fine tune them. And with the ever changing laws/rules that vary state to state, he might have a few pointers on phraseology, or point out something you might also want to think about.
I update mine about every 2 years - as the situation changes - and consider it major peace of mind
August 15th, 2008 at 3:46 pm
Congratulations on setting that up! I am so lucky to have that coverage included with my work benefits. It does bring quite a bit of peace of mind. My husband and I are going on 2 and a half years of marriage and have yet to write up our wills. It’s really just a formality since we don’t have many debts or assets and no kids yet, and shouldn’t take us long at all, but we never seem to get around to it.
Keep up the great blogging!
August 15th, 2008 at 6:59 pm
Please consider a Living Trust! It’ll keep your beneficiaries out of probate court and the -potentially- thousands of dollars in costs as well as the delay in access to anything in your estate. There are online versions which would be adequate unless you have a special situation. The big deal is getting your home and major investments into the trust after you’ve established it. its a bit of paperwork but well worth the effort. A trust doesn’t negate the need for a will, but is great for handling the legal transfer of property.
Some communities have an “Ask a Lawyer” night at a local library, and if you’ve done all the paperwork ahead of time, it’d be easy to have the lawyer double check everything, as Marci suggests.
August 18th, 2008 at 7:26 pm
This is wise, really wise.
Ditto the idea about the trust. Everything in my estate is slated to go into a trust, thereby making things a little easier for my son.
It’s a good idea, too, to own enough life insurance to pay off the mortgage on your house, if you have one. This will free your partner of a huge debt burden and make it possible for him or her to hire people to help take care of the kids and property, should the need arise.