LTD Insurance

Hello,

I had my own independent software consulting practice a few years ago, during the technology bust. At that time, I purchased my own disability insurance plan for income protection. The policy I obtained paid out for "own occupation" i.e. if I couldn't do the job I was trained for. Premiums are currently at ~$125/month.

Recently, I decided to return to the W-2 world and work for a large company. This company provides long-term disability insurance. I checked their plan, and it is basically a typical "2-year own occupation, after that any occupation" type of plan. i.e. if I was disabled, the insurance would pay my benefit for 2 years. After that, I would have to prove I couldn't do *any* job for that plan to continue paying me.

Now: this does mean that (a) I am doubly insured (overinsured?) for disability; both through my own plan, and my new employer. (b) I purchased my own plan well before I joined my new employer.

I guess I'm trying to ensure that I'm not paying $125/month for something that will not pay out if I get disabled, ostensibly 'cos I'm "overinsured".

I spoke to the insurance agent - he said that because of (b), this is not a problem. i.e. if I was to get disabled, I would get the full benefits of my own plan as well as my current employer's plan.

Is this correct?

Thanks in advance.

Alex.

Reply to
Alexei Lalas
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My understanding is that insurers won't normally pay out more than

65-70% of your total pre disability income. So yes you are double insured, and the total payout will be lowered.

However after the 2 year period of disability, your 'own occupation' policy would be very valuable. Because your employer provided policy would require you to take any job they deemed suitable.

Unless you never contemplate being self employed again, or changing employer, I would tend to keep the individual policy, costly though it is. It is a very significant protection against future disability and if your health happens to deteriorate, it will be much more expensive to get it again.

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Reply to
darkness39

The Definitive answer is "maybe yes & maybe No"

Because you OWNED the contract before your newer group contract came into play, it IS a CONTRACT, and WILL pay the benefits that they CONTRACTED for ! ! ! ! ! ! !

HOWEVER, it IS imperative that you READ (read have attorney read) BOTH contracts to determine if there is any wording in either contract that will permit the Carrier to take into consideration any other existing contract/contracts presently IN-FORCE.

One or both of them may have such a clause in their contract. The worst that could happen is that you could be restricted to receiving 100% of current salary.

In any event, the generally accepted thinking is to MAINTAIN the personal contract to alleviate any possibility of not having coverage in the event that the "job" peters out.

Reply to
Cal

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