Supplemental Disability Insurance through employer?

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Topic Author
gg420
Posts: 3
Joined: Mon Jul 04, 2022 12:08 pm

Supplemental Disability Insurance through employer?

Post by gg420 »

Would appreciate thoughts on the Supplemental LT Disability Insurance offered by my company to employees making at least $200k annual. It seems to meet criteria outlined in the Wiki, I am considering Option 1 below.
I work at a large company in a thinking/desk job which requires a scientific PhD or MD. Age 50, compensation: ~$220k + annual incentive bonus (~25-50%) + RSUs.

My company provides all employees with group long term disability insurance, for which company pays the premium and cannot opt out:
- covers up to 60% of base salary, to a monthly maximum of $10,000 (before taxes).
- Does not cover incentive/bonus pay

There are 2 options for Supplemental IDI:
Option 1: 75% Income (including incentive income/bonus), Additional Catastrophic Disability benefit of $5,275/mo. Premium = $140/mo
Option 2: 62% Income (including incentive income/bonus), Additional Catastrophic Disability benefit of $2,638/mo. Premium = $70/mo

- provided through Unum/Provident Life and Accident Insurance Company
- Individually owned policy: coverage is fully portable, keep coverage — even if change employment.
• Benefit Period is up to age 65. For disabilities occurring between ages 65 and 75, the maximum benefit period is 24 months. For disabilities occurring after age 75, the maximum benefit period is 12 months.
• Elimination Period is 180 days.
• Non-Cancellable (Non-Can) policy – As long as premiums are paid on time, policy cannot be cancelled and premium amount is guaranteed until you reach your 65th birthday, (unless you increase the benefit amount of your original policy).
• Total Disability Benefit for Your Occupation – The base policy pays benefits for up to 24 months if you are totally disabled in your occupation, which means you are unable to work in your occupation, not working in any other occupation, and are under the care of a physician. After benefits have been paid for 24 months during a disability, further benefits are payable if, due to injuries or sickness, you are unable to perform the material and substantial duties of any occupation* and are under the care of a physician. *Any Occupation means any Occupation for which You are reasonably fitted based on education, training or experience.
• Benefit for Residual Disability – You must be under a doctor's care to be eligible for this benefit, which can pay for up to the end of your benefit period. You don't have to be totally disabled to be eligible, but you must still either lose time (due to injury or sickness) from your job or be unable to perform some of your job requirements and incur a loss of earnings of at least 20%.
• Work Incentive Benefit (WIB) - A feature of the Residual Disability Benefit that provides short-term monthly benefits during the first 6 months of a compensable residual disability. These short- term incentive benefits are equal to the difference between your pre-disability earnings and your current earnings, for up to 100% income replacement, subject to your maximum monthly benefit amount.
• Recovery Benefit – Provides a benefit for 6 months if you fully recover, return to full-time work in your occupation but you continue to lose earned income due to your prior disability. This provision pays a benefit while you re-establish your earnings base. The amount you get is based on the percentage of earnings you lose.
• Catastrophic Disability Benefit – This option provides an additional benefit of $5,275 monthly (in addition to your individual policy benefits) if you suffer a catastrophic disability. A catastrophic disability is defined as the loss of two or more Activities of Daily Living, including bathing, dressing, eating, toileting, continence and transferring; cognitive impairment; or presumptive disability (the total and permanent loss of hearing, sight, speech or use of two limbs).
• Voluntary Suspension During Unemployment - You can suspend paying premiums for up to one year due to your unemployment. Any loss occurring during the suspension period will not be covered.
• Survivor Benefit – Three months of benefits will be paid as a lump sum to your Estate if you have satisfied the elimination period and
are receiving benefits at the time you pass away.
• Waiver of Premium – After your first 90 days of a covered disability, all premiums are waived. The premiums you paid during the 90-day period are refunded, and subsequent premiums are waived while you remain disabled. This benefit will be suspended during any period of legal incarceration or legal detainment in a penal or correctional institution of more than 7 days.
• Recurrent Disability Provision – For a disability that recurs within six months after the end of a previous disability that is due to the same or related causes, this provision waives the elimination (waiting) period. You won't have to satisfy a new elimination (waiting) period and your benefit period will pick up where it left off when you returned to work full-time.
• Rehabilitation Benefits – Can help you regain your self-sufficiency as soon as possible. While you are disabled and receiving benefits, we may pay rehabilitation expenses not covered by other benefits.
• Guaranteed Coverage Increase (GCI) – Provides an annual increase to your monthly benefit. There is no medical underwriting. Increases are available up to the plan maximum and subject to the receipt of income information from your employer. GCI is available as long as you 1) are employed and are actively at work on a full time basis with your current employer, 2) continue to be eligible under your employer's plan and 3) exercise the GCI feature on an annual basis, as eligible. Increases to coverage are applicable to new periods of disability beginning after the effective date of the increase.
• Mental Disorder Coverage – Pays benefits for up to 24 months during the policy's lifetime and subsequent periods of hospitalization for disabilities related to mental conditions. However, if you are disabled due to dementia resulting from a stroke, trauma, infection or a degenerative disease such as Alzheimer's, the policy pays up to its full benefit period.
BruDude
Posts: 4211
Joined: Wed Dec 29, 2010 11:28 pm
Location: Las Vegas

Re: Supplemental Disability Insurance through employer?

Post by BruDude »

Sounds like a fairly reasonable offer given your age. Some of the policy benefits aren't as strong as what you'd be able to get purchasing a policy on your own, but an individual policy would likely be more expensive. You can always opt into this and then shop around for an individual policy to see if you can get something more comprehensive. That would be my suggestion at least.

One thing to keep in mind is that this offer is a percentage of your income that will change over time, while an individual policy is an indemnity benefit where the amount doesn't change each year based on your income. If your bonus/RSU income drops, you could wind up with less coverage than expected.
deikel
Posts: 1616
Joined: Sat Jan 25, 2014 6:13 pm

Re: Supplemental Disability Insurance through employer?

Post by deikel »

I think the caveat emptor is this one here:

"After benefits have been paid for 24 months during a disability, further benefits are payable if, due to injuries or sickness, you are unable to perform the material and substantial duties of any occupation* and are under the care of a physician."

There is an asterix, so that should trigger some more detail reading. Any occupation as a stand alone could mean literally anything and the policy beomes a 24 month pay out policy (which may be covered already by STD or LTD)

Also, I am not clear on the 75 and 62% payout levels ? Is this in addition to the company provided plan with 60% payout - making for a total of up to 135%...That could actually be really useful if you need more money to compensate for help/home modifications and so on, but I doubt any insurance would put such an incentive in place to make more money when out on LTD...

In general, I would never advise to get these insurances through your employer or if you do, make 100% sure you know the sequence of events if and when you end employment. Can you continue the premium on your own, is the insurance gone when you loose employment. Is the insurance gone when you have an interruption of employment due to illness for example, which would make the whole thing moot - they go by the latter of the contract and not by what one would assume is common sense.
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mrc
Posts: 1908
Joined: Sun Jan 10, 2016 5:39 am

Re: Supplemental Disability Insurance through employer?

Post by mrc »

"After benefits have been paid for 24 months during a disability, further benefits are payable if, due to injuries or sickness, you are unable to perform the material and substantial duties of any occupation* and are under the care of a physician."


We looked for "OWN occupation" and not "ANY occupation" when we took out disability insurance. A brain surgeon that can't operate could still flip burgers and thus not qualify for benefits.
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BruDude
Posts: 4211
Joined: Wed Dec 29, 2010 11:28 pm
Location: Las Vegas

Re: Supplemental Disability Insurance through employer?

Post by BruDude »

mrc wrote: Tue Jul 05, 2022 4:27 pm "After benefits have been paid for 24 months during a disability, further benefits are payable if, due to injuries or sickness, you are unable to perform the material and substantial duties of any occupation* and are under the care of a physician."


We looked for "OWN occupation" and not "ANY occupation" when we took out disability insurance. A brain surgeon that can't operate could still flip burgers and thus not qualify for benefits.
As stated in OP's post:

*Any Occupation means any Occupation for which You are reasonably fitted based on education, training or experience.

Not great but not the worst definition either. Since OP is 50 years old buying any individual DI policy is likely to be a good bit more expensive than what the employer is offering. The individual policy will be more comprehensive but is higher cost and also requires medical underwriting and the employer policy does not require underwriting. In general, it is very difficult to get individual policies for 50 year old people without multiple exclusions or limitations. Most people at that age have some sort of health issues that will factor into purchasing their own DI policy, though I know nothing about OP's actual health history obviously.

There is a limited timeframe to enroll in the employer plan which is why I suggested doing that and then shopping for an individual policy too as a possible replacement.
Topic Author
gg420
Posts: 3
Joined: Mon Jul 04, 2022 12:08 pm

Re: Supplemental Disability Insurance through employer?

Post by gg420 »

Thanks all, appreciate the feedback and think the suggestion to opt in but then shop around makes sense.
Topic Author
gg420
Posts: 3
Joined: Mon Jul 04, 2022 12:08 pm

Re: Supplemental Disability Insurance through employer?

Post by gg420 »

Thanks all, appreciate the feedback and think the suggestion to opt in but then shop around makes sense.
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