I’m sitting in one of those mandatory work meetings where someone comes to talk about insurance options. Vision and dental are an obvious one for me, but then there are all these other options:
-Disability insurance
-Long term disability insurance
-Cancer benefits
-Accident benefits
-Medical bridge benefits
-Critical care benefits
I typically sign up for none of these, since my intuition is that they’re a massive scam–but I also know that I’m sometimes pathologically skeptical. Certainly the salesperson who comes to talk with us isn’t a reliable judge of what I need–she’ll tell me I need them all, no doubt–but where can I look for unbiased information?
There are none. The ACA got rid of them. They’re illegal now. Good for me since I had a micro-preemie that has cost the insurance company somewhere north of 2 million dollars. Bad for everyone else paying premiums. Sorry all. My now 9 year old thanks you.
Statistically you are far more likely to become disabled than die early. And IIRC a disabilty that puts you out of work for 90 days has about a 50% liklihood of lasting a mean of 2 years. If losing income for that long would be financially problematic then seriously consider the long term disability coverage.
If you have a strong family history of cancer that has a genetic link then the cancer coverage may help you with the many expenses that may arise that are not covered by traditional health insurance. Travel for treatment, loss of income, and high copays are common financial stressors for cancer patients.
I wouldn’t call them a “massive scam” but in general the rarer something is, the higher the retention aka risk charge is.
A lot depends on whether they’re being subsidized by the employer. Both because you save money directly from the employer subsidy and also because the rates charged by the insurer are typically lower for employer-subsidized coverage. This is because the less the employee pays, the higher percentage of low-risk people sign up. This is certainly true of disability benefits, and probably of the others too but I don’t have factual knowledge in the other cases.)
Are there other people who depend on your income? Wife? Kids? If so, long-term disability would be worth considering so that their lives aren’t impacted as much if you can’t work due to illness.
Doesn’t oneself depend on one’s income, assuming you don’t have a super-rich family or spouse?
That said… news to me if short and long-term disability are scams. Long-term disability was one of the things I fretted about when I was self-employed and unable to purchase one. If I become blind or crippled or otherwise injured, I’d prefer to be blind/crippled/injured with an income, not just dependent on social security.
Short-term disability has always been explained to me as “Say you have an injury that is not permanent, but will take a month or two to recover from. This will cover you between when your sick leave runs out and when you come back to work.” Seems like a good deal to me.
That said, neither of these policies cost much at my job. I think one or the other is fully covered and comes automatically if I recall correctly.
The others - cancer / accident / etc - I didn’t go for. I didn’t think they seemed scam-ish, they just didn’t seem worth the money.
Yeah, I’m not saying they’re scams, I’m saying that’s what my gut tells me.
That’s a really good point.
So is that. I don’t have a huge family cancer risk (it’s strokes and heart disease what does us in), but we struggle to keep 3 month’s savings in the bank, so probably long-term disability would be worth it.
My reasoning with the LTD insurance is that if you’re single, then the consequences of no income only affect you. But if you have a family that depends on your income, then you should consider how they would have to adjust. You might be okay moving in with your parents, but they might not.
It will always be financially problematic. Even if you’ve got savings to rely on, the savings will then be gone (and the other things you might have used it for also gone).
Get disability insurance, and get it when you are young and heathy. Once you’ve found out that you have something wrong with you, or you get in a bad accident, it’ll be too late. It’s bad enough being sick, being sick and poor is much worse.
I have just got out of hospital where I was meant to be for a few days after an operation. Everything went a bit wrong and I ended up with 2 more operations (on a different bit to the original surgery) and 6 weeks stuck in hospital. I’m still knackered.
Just give some thought about what that might mean for you. Bear in mind that you might have additional expenses over and above your normal household expenses - driving to doctors’ appointments, buying medications and dressings (10 pressure dressings cost me $130), paying people to do things that you can’t do while you’re laid low.
If you have a mortgage, consider how long you will be able to service it if you are unable to work. Banks don’t care, they’ll sell your house out from under you if they think you aren’t going to be able to repay the mortgage.
Aren’t you technically a state employee (I seem to recall that you teach elementary school here in NC)? There are some short- and long-term disability benefits built in to the state pension plan, so I’d look at what you get there first before going for extra coverage that might not add much to that.
Many, many years ago I worked as an insurance agent briefly. And from what I recall clients with health conditions that might kill them suddenly could sometimes get disability insurance at cheap rates.
The underwriters assumed someone with heart disease might keel over quickly and not have an expensive disability claim. But someone with a history of back or knee problems would be a high risk and get uprated for a disability policy. A bit of a flip from life insurance underwriting.
Interesting–any idea where to look for this information?
I’m in pretty good health for a guy in his mid-forties–other than a debilitating needle phobia, I don’t have much in the negative column. But I do have a family who depend on my income, so y’all are making me think that, unless it’s crazy expensive, I ought to go for disability after all.
That being the case, check out the details of what the critical care policy covers. If it’s like the critical illness policy that I have, it may pay for things like heart attacks or stroke. Those things won’t necessarily “do you in.” They could leave you alive and with a whopping big hospital bill. It’s at least worth considering.
It might seem “crazy expensive” if you are thinking of paying the premiums and not what having to claim will give you. (down here, it’s tax deductible). I thought private health insurance premiums are “crazy expensive” (and they are), but after having my recent troubles, I’m glad I have it. Insurance seems like “money down the drain” until you are in the position of having to make a claim.
Yes and no. IMO a lot of it depends on the cost; employer-offered LTD insurance has been dirt cheap in my experience. I just looked it up, I pay something like $3/month for a policy that covers 60% of my salary until retirement age if I ever use it. That’s well worth it, even if I do opt to move in with my parents (doubtful, since one is dead, the other is living in assisted living.)
That’s a good deal! My LTD costs a lot more than that. So the lesson here is that the costs of those coverages is important to know when making a decision.
But what’s also important is the details of what your regular medical policy covers. If you have big limits on your coverage than there might be room for the critical illness policy. But if you have a reasonably generous medical plan then there’s no need to over-insure with a critical illness policy.
Generally insurance income is taxable once. Meaning if you pay for an insurance benefit with after-tax dollars, then the benefits will be tax deductible. If you pay for it with pre-tax dollars, then you pay tax on the benefits. (This applies to income type benefits like disability income, and not to medical benefits. And it’s only a general rule.)
None of those are scams if reasonably priced. The disability insurance both long and short term are likely well worth it. The others depend on the cost/benefit of the plan. If the basic medical plan is a good one then the extra benefits are kind of a gamble. But if any of them are just a few dollars a year the payoff if those circumstances ever do occur will be well worth it. However, since you are relatively young and healthy you should look at how the cost would affect your overall economic condition. Keeping debt low and savings high is also a good buffer against future health problems.