Buying Life Insurance and Supplemental LT Disability
October 31, 2013 7:56 AM Subscribe
My husband and I are looking to purchase term life and supplemental LT disability insurance, but we're really not sure what terms to look for (and look out for), which companies are reputable, and how the process works overall. Do you have any experience here?
Dear husband and I are looking for term life insurance and supplemental LT disability, but we don't know where to start or what we should be looking for. It definitely seems like there are some traps for the unwary (i.e., we'll want "own occupation" insurance, not "any occupation" insurance), and we're sure there are many more things to look for or insist on.
But we have lots of questions, too--how do we find a reputable insurer, do we get a benefit for getting both lines of coverage from the same firm, how much coverage do we need, etc. How does pricing take into account, if at all, changes in behavior? For instance, DH smoked briefly for about a year about four years ago, and has high cholesterol he's working with a doctor and nutritionist to reduce. Some of the policies ask whether the covered person has smoked within 5 years, or has high cholesterol. Will the price go down once the past smoking rolls off the past 5 years, and when his cholesterol is brought down? Or is the price fixed at the start?
We're not looking for any of the packaged life insurance products.
Any insights you can give would be very helpful. If it matters, we're in the Boston area, and dear husband is a high earner for income replacement purposes.
Dear husband and I are looking for term life insurance and supplemental LT disability, but we don't know where to start or what we should be looking for. It definitely seems like there are some traps for the unwary (i.e., we'll want "own occupation" insurance, not "any occupation" insurance), and we're sure there are many more things to look for or insist on.
But we have lots of questions, too--how do we find a reputable insurer, do we get a benefit for getting both lines of coverage from the same firm, how much coverage do we need, etc. How does pricing take into account, if at all, changes in behavior? For instance, DH smoked briefly for about a year about four years ago, and has high cholesterol he's working with a doctor and nutritionist to reduce. Some of the policies ask whether the covered person has smoked within 5 years, or has high cholesterol. Will the price go down once the past smoking rolls off the past 5 years, and when his cholesterol is brought down? Or is the price fixed at the start?
We're not looking for any of the packaged life insurance products.
Any insights you can give would be very helpful. If it matters, we're in the Boston area, and dear husband is a high earner for income replacement purposes.
Good for you for looking into LTD insurance. Not having it can wipe you out financially (readers, take note, because medical insurance doesn't cover long term care) if one of you gets debilitated. For LTD insurance I use Genworth. I'm not sure whether the rates have gone up since I got my policy, but when I got it they had a very good deal on covering a husband and wife together as a package. I got the policy through an insurance broker. In the financial industry, products are always changing, so what was a good deal last year may not be the best deal this year, and therefore you should use a good broker or agent to help you find all the current best options. Things to consider about policies are how much they will pay per day, whether you can use it for in-home care, whether there's a cap on how long you can use it, etc.
posted by Dansaman at 8:29 AM on October 31, 2013
posted by Dansaman at 8:29 AM on October 31, 2013
LTD disability is sometimes a difficult product to find in the individual market. Is this offered through either you or your spouse's employers? If so, obtain it through that channel. If not, start contacting multi-carrier (not captive) brokers. Maybe start with the broker from whom you buy your auto/renter's/homeowner's policy.
In my experience, individual LTD policies were often bundled with term life insurance, AND there was an extra long waiting period for benefits (as compared with a group LTD policy). But yes, products change, so it's best to contact a few brokers in your area to see what is available. The brokers in your particular area will be the experts to consult.
If you don't work with a broker, start asking around--who does your neighbor, business associate, etc. buy insurance from?
posted by FergieBelle at 8:58 AM on October 31, 2013
In my experience, individual LTD policies were often bundled with term life insurance, AND there was an extra long waiting period for benefits (as compared with a group LTD policy). But yes, products change, so it's best to contact a few brokers in your area to see what is available. The brokers in your particular area will be the experts to consult.
If you don't work with a broker, start asking around--who does your neighbor, business associate, etc. buy insurance from?
posted by FergieBelle at 8:58 AM on October 31, 2013
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Do have a think about whether or not you really need to sustain the current standard of living in a worst-case scenario. Some time back I ended up the victim of an extended insurance pitch from my bank (while getting a mortgage, couldn't escape the office) and I was amazed at the hard sell for the idea that I would suffer terribly if the income dropped at all. But I'd be a widow, I'd be poor, so what?
Willingness to be lower-middle-class in the event of tragedy made a big difference in monthly payments for either scenario, so if both of you are okay with the idea that a death or serious illness could leave you lower-middle (but not destitute), leverage that and don't buy more insurance than you need.
posted by kmennie at 8:03 AM on October 31, 2013