Disability insurance

[dentite24]

Is disability insurance worth it for me?
I’ve been paying $100+ per month (will go up over time) for disability insurance where I only get paid out for a couple years if I become disabled? Is this really worth it financially for me? I had an existing condition that caused the policy to only pay out for 2 years instead of until 67..

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[Pablo Sanchez]

Disability insurance is a tough thing. I think most financial people recommend it. “Your income is your biggest asset.” Two years of coverage isn’t going to be life changing either way, so I personally probably wouldn’t pay over $100 per month for two years of coverage. How much coverage is it during those two years? $60,000/yr? $120,000?

They use fear to sell this stuff. In our field we make a good income. Theoretically, once you have $600k invested, the historical average return of the S&P500 is 10% so that would be pumping off $60k per year. So another option could be to self insure. Save aggressively. Maybe pay for the disability insurance until you have a solid portfolio pumping off the passive income at a point where you wouldn’t need to pay for the disability anymore. That’s going to serve you better over the long term than paying thousands per year for two years of coverage.

 

[dentite24]

It would be so freeing to just cancel it one day. It’s like a bad TV subscription or bad loan that I just want to go away

 

[Molar Whisperer]

If your spouse/partner has decent income, you don't need or need very little life or disability insurance. There will be many that disagree but IMO, it is a waste of money. The insurance companies take your premiums and invest it. They have Reinsurance companies that pays them when you file a claim. In essence, do what they do with your premium money. Insurance companies exist to make huge profits and are not looking out for your interest. Since I was in the military, I use USAA for my umbrella, home & auto. I max on umbrella and go bare bones on house and auto since I can pay for most catastrophes out of pocket. Each year, they pay me back about $300 subscribers savings distr.

 

[dentite24]

Yeah I really have this feeling that disability insurance is one of the greatest scams of all time

 

[Molar Whisperer]

Yeah I really have this feeling that disability insurance is one of the greatest scams of all time

About 22 yrs ago, I looked into disability for $3k payout each month (my wf doesn't work). The premiums were very expensive for such a measly amt they will pay. They check your blood, medical, extensive questionnaire like they will own your body. Hopefully you have a spouse that works and as long as you don't get a divorce, life will be good without unneeded ins. As a side note, look at all the stupid Ins commercials. When my kids were little, they will sing along their jingles. Who will be paying for all that especially record millions for a 30 sec ad during the Super Bowl.

 

[charlestweed]

I’ve paid $1700/year for my disability insurance. Unlike other insurances, this yearly premium does not go up every year. So for the last 23 years, I’ve paid around $39k, which is an insignificant amount for a dentist, who has earned several million dollars over the 23 yr period. My wife also had the disability insurance but as soon as we paid off our student loans (in less than 5 years), we cancelled her policy because we would still be fine financially if she became disable.

I bought the insurance for peace of mind because we had 2 young kids….just in case I had a certain type of cancer or illness (like a stroke) that prevents me from working but not severe enough to kill me. Now that my kids are older and we are debt-free, I see less need for this disability insurance. But I still haven’t cancelled it because it’s not that much. It’s only $1700/yr or only $140/month, which is less than what I typically pay for a meal for my family of 4 every time we go out to eat.

If I became disable, I would feel less bad….I wouldn’t feel being a burden to my love ones. I would feel better if the disability money could be used to pay for a nurse/caregiver and medical expenses…and not have to come from my love one’s checking account.