Let me just say first, if I can manage to figure this out, you can too. I’m not the most savvy of internet users – more proficient than average, maybe, but definitely no expert. In fact, I’m finding it difficult to navigate the world of long term disability insurance from my computer and finding legitimate companies that aren’t front pages for affiliate ads to companies I have never heard of, but I am trying.
Earlier this week I wrote about my spouse’s employer offering short term disability insurance, and us exploring if it was a good idea for us. Disability insurance has long been on the list of “things we should have but as of yet do not” – we have made progress on the list but disability insurance isn’t something we’ve tackled. But we should. Writing about short term disability insurance brought the long term option to the forefront of my mind, and ultimately after many encouraging comments kickstarted me actually looking into it.
Let me say, things I don’t know anything about intimidate me. The activation energy required for me to take those initial steps, for really anything, seems enormous. It was that way with getting life insurance, buying a house, even getting out of debt. It was really hard to start, but once we did get ourselves in gear and started taking serious steps, the process went rather quickly.
So now I’ve taken those first steps, and hopefully that means the activation energy is overcome and soon we’ll be on the way to having long term disability insurance for my spouse. We decided to just look at coverage for my spouse at this time for several reasons. One, our goal is to be able to live on my spouse’s income alone. At this point, it would be very tight and our debt elimination would stall, but we would be able to get by solely on my spouse’s income. We wouldn’t be getting ahead, but we could survive without my income. Second, of my three “jobs”, only one has an actual employer (taekwondo), tutoring is a contract position and I am not an employee, I am an independent contractor, and blogging is self-employment. So it would be very complicated if not impossible to get coverage for my entire income. And third, the blogging is partly passive via advertising revenue so it wouldn’t disappear completely immediately if I wasn’t able to do it for a period of time. In the future, we may look into some sort of coverage for me too, but at this time, it is my spouse’s income that we primarily depend on, so it is my spouse’s income we need disability protection on.
So, on to the actual process. I did a number of searches online for disability income insurance plans, as well as took suggestions from the comments on my previous post, and found one company I could get a generic quote online within 24 hours (Guardian), and then two others that I could ask a representative to contact me to discuss a quote (MetLife and State Farm). I also called our current insurer for home, auto and life, Allstate, and talked to my agent about getting a quote. I did try to find information about several other companies but I came up empty as far as online searches went, so I moved on. Four quotes should give me a good idea at least.
My spouse’s employer actually uses Guardian for the short term disability policy they are offering, as well as their dental coverage (which we have currently). So I am somewhat familiar with them. They sent their online quote, and there were a number of options. The coverage was to replace 70% of my spouse’s current salary, and would be tax free if we paid the premiums with after-tax dollars (which we would). The policy covers if my spouse is disabled and cannot perform his current occupation, even if he can be employed in a different one, is guaranteed renewable and non-cancellable on their part until the age we select (more on that in a minute when I discuss options) and had two additional things I could add to the policy for an additional cost – I can elect to have the policy adjust upwards until age 55 as my spouse’s income increases, and I could elect to have a rider that starts coverage when as little as 15% of income is lost due to disability. I also had two variables I could change that affected the cost of the premiums – the length of the policy and the waiting period for it to become effective after a disability. I could have the policy last 10 years, until age 65, and until age 67, and I could start coverage as little as 60 days after a disability or as long as 360 days.
For my spouse, the policy we were quoted, depending on if we added the additional riders and what variables we selected, the coverage would cost anywhere from $57 – $215 a month. We are leaning towards a policy that would start 180 days after disability and provide coverage until age 65, which would be about $100 a month (starting 360 days after disability is $90/month). We would also include the additional riders for automatically adjusting upwards as his income rises and the residual disability (coverage at 15% or more disabled), which is included in the $100 (or $90) a month. I’d like to elect the 360 days after disability one instead, but I don’t think having that large of an emergency fund for us is likely for a good long time.
We haven’t decided if we will go with this company, of course, but it is nice to get the ball rolling and at least find out some information about coverage and costs. We have many more quotes to get information about and compare to this one. But the ball is rolling. This seems to be the week I tackle a bunch of “now I’m really an adult and I need to think about this” questions. And if I can do it, you can too. Protect your financial peace.