Do I need my private LTD policy

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Topic Author
mancich
Posts: 1219
Joined: Fri Sep 05, 2014 2:05 pm

Do I need my private LTD policy

Post by mancich »

Hello all,

I have a LTD policy at work that pays 60% tax free, and this kicks in after 6 months of STD. Wife and I have about $550,000 in taxable/Emergency fund, and about $1.4MM in 401k. I am 22 months away from being able to access another $1.6MM in a lump sum pension from MegaCorp if needed, at 55. DW works as well and makes low 6 figures.

I have a private LTD policy that covers the other 40% of my income. It would kick in 6 months after becoming disabled. It cost $2650 a year. If I was to become totally disabled, the employer-provided policy that pays 60% would cover our expenses, plus we’d have my wife’s salary and our savings if worse came to worst. So, do I need to spend $2650 a year anymore? I got the policy back in 2013, and so have paid over $21,000 so far. I know LTD insurance is for more than becoming disabled in an accident, but I have a work at home job, do nothing risky like climbing on my roof, am a careful driver, etc, and am in very good health.

For what it is worth, my former “financial advisor” from Ameriprise sold me this policy (I’ve since dropped him and do all my own investing following the Boglehead way, but kept the policy in force).

Thanks in advance for the feedback.
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Bogle7
Posts: 1984
Joined: Fri May 11, 2018 9:33 am
Location: In the Witness Protection Program

Re: Do I need my private LTD policy

Post by Bogle7 »

What you are really asking is: should I pay another $5300 “just in case”?
I would say yes.
Old fart who does three index stock funds, baby.
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Plano
Posts: 69
Joined: Sun Nov 03, 2019 3:21 pm

Re: Do I need my private LTD policy

Post by Plano »

It depends on what the individual policy covers. Is it true own occupation through normal SS retirement age? If so, it may be worth keeping, even if you could financially withstand a disability. But that premium is way too low, so I suspect the coverage is for a short period only. That said, I wouldn’t cancel a life or disability policy during a pandemic. The scales of risk are tipped in your favor, well beyond where they were when the carrier sold you that policy for that low price.
Topic Author
mancich
Posts: 1219
Joined: Fri Sep 05, 2014 2:05 pm

Re: Do I need my private LTD policy

Post by mancich »

Thanks, I appreciate the responses
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