Someone just sent me a PM. I'm changing it slightly to protect his identity.

"I saw you discussing disability insurance on this thread.
I'm in a situation where I need to apply for a personal policy as my company closed and I started my own business; I took clients with me so I have stable income but I have serious health issues..."

I wanted to post this because I can't stress something enough. We are healthy until the day that we are not. Why do I recommend that 25 year old single people buy life insurance? Every week, I talk to someone older who needs coverage but can't get it. The vast majority of people who are uninsurable (or insurable at high rates) in their 30's were insurable in their 20's. This isn't about an insurance agent earning commissions. The cost is too dirt cheap to take an unnecessary risk.

With disability coverage, most people have coverage through work. It usually needs to be supplemented (poor contractal language, lack of portability, insufficient coverage). One advantage of supplementing work coverage is that an individual policy should have a future insurability option rider. That means that the person who asked the question would not only have the individual coverage that he originally purchased, but he would also be able to buy more without health questions.

Good point. Any suggestions on life insurance/disability providers?

I agree the premiums are at historically low level. But one risk to keep in mind - if hyperinflation arrives, then the life insurance policies won't be worth much and today's low premiums will appear very expensive in hindsight.
That is why I explored and rejected ROP policies (Return of Premium)

We dont often agree, but I completely agree with Insurance Expert's OP - that you SHOULD get individual life and disability coverage in effect while you re healthy, and DO NOT depend on coverage through your employer.

Losing coverage because your employer fails is a greater risk these days than ever before.

boomp said:davegolden99 said:Good point. Any suggestions on life insurance/disability providers?

Once you've shopped around talk to your state insurance regulator.This goes for health insurance and any insurance really.
They can be very helpfull in sorting thru fine print and getting the most for your money.
Of course they are unbiased and not commision based like an insurance salesperson might be.

Boomp, can you explain a little more. I'm curious as to the type of conversation that a consumer would have with an insurance regulator. For instance, if you were my client, I might say something like, "I am recommending that you buy $1,200,000 of 20 year level term insurance from ABC Company. Additionally, I am recommending that you buy $4,000 a month of disability coverage from XYZ Company." What questions would you need the regulator to answer for you?

InsuranceExpert said:boomp said:davegolden99 said:Good point. Any suggestions on life insurance/disability providers?

Once you've shopped around talk to your state insurance regulator.This goes for health insurance and any insurance really.
They can be very helpfull in sorting thru fine print and getting the most for your money.
Of course they are unbiased and not commision based like an insurance salesperson might be.

Boomp, can you explain a little more. I'm curious as to the type of conversation that a consumer would have with an insurance regulator. For instance, if you were my client, I might say something like, "I am recommending that you buy $1,200,000 of 20 year level term insurance from ABC Company. Additionally, I am recommending that you buy $4,000 a month of disability coverage from XYZ Company." What questions would you need the regulator to answer for you?

All questions you'd have about what you are actually getting for your money. When I was comparing my health insurance to a competitor my state regulator was very helpful in sorting out what the fine print actually meant in my case.

anthonyu, I'm currently looking at options for disability insurance. It varies based on your occupation and amount of coverage you want. There are varying degrees of coverage (own occupation, guaranteed renewable, etc etc). You really need to talk to an agent for a realistic quote based on your situation. It is much more expensive than life insurance for good coverage (much more likely to become disabled at some point in your life.. than, well... die)

anthonyu said:InsuranceExpert:

1. I understand that each situation is unique, but what would be your possible recommendations to the person that PM'ed you?

2. If someone came up to you and said I need good disability insurance. I'm 30 and healthy. Go ahead and make whatever reasonable assumptions are needed from the client to write up a policy. What would a typical recommendation be and how much (estimate a range) would it cost?

1. The person who PM'd me is pretty sick and probably doesn't have any good options, but I'm looking into it. Unfortunately, for someone who is in poor health, they sometimes have to make employment decisions strictly based upon disability benefits. To give you an example, a client of mine has M.S. She has no individual coverage. She was offered a job that is closer to her home and pays significantly more. She couldn't accept it because of the lack of disability coverage.

2. More information is definitely needed. Some of the information that would definitely be needed would include:
Occupation?
Income?
Smoker status?
Sex?
Coverage through work?

Just as a rough estimate, a good policy for a male will cost 1-2% of their income. For a female, it would be 2-3%.

The way to mentally look at this is through the "2 jobs scenario". You have two job offers. They are identical in all respects. Job A pays $50,000. If you become sick or hurt, your income will stop. Job B pays $49,000. If you become sick or hurt, your income will continue to age 65. There's obvious more to it then that, but it's a good starting point.

amandaw33 said:anthonyu, I'm currently looking at options for disability insurance. It varies based on your occupation and amount of coverage you want. There are varying degrees of coverage (own occupation, guaranteed renewable, etc etc). You really need to talk to an agent for a realistic quote based on your situation. It is much more expensive than life insurance for good coverage (much more likely to become disabled at some point in your life.. than, well... die)

The last time that I checked, the chance of death was 100%. Your point is very valid during one's working lifetime. When someone doesn't have any work coverage, it can be pretty pricey. On the other hand, a young male attorney supplementing a work policy can buy a top of the line disability policy with all the bells and whistles for under $50/month.

SUCKISSTAPLES said:InsuranceExpert said: On the other hand, a young male attorney supplementing a work policy can buy a top of the line disability policy with all the bells and whistles for under $50/month.I fit that criteria exactly, but there is no way I can get such a policy.

What kind of benefit amount are you talking, and which DI issuer?

Lastly - will they consider a self employed attorney who takes HUGE business deductions to reduce tax liability to near 0?

A 28 year old male attorney making $100,000 a year with group disability coverage of 60% would qualify for about $1300/month benefit. If this attorney was contributing $1,000/month into his 401(k) plan, he could also have this covered.

With cost of living, partial, future insurability option and own occupation coverage, it will be less than $50 from Guardian/Berkshire.

SIS, no top quality carriers will want somebody with a tax liability of near $0. Let me rephrase that. They don't want someone showing very little taxable income. If someone is showing $500/month of income and they have a policy that will pay them $5000/month, there is incentive to become disabled. It makes for a bad risk.