Disability Insurance?

[JayB]

I know that there's been quite a bit of a discussion on this and other message boards about some of the difficulties that come along with getting private life insurance if you are a climber. It seems to me that the odds of getting permanently disabled, or disabled to the extent that you can no longer continue working in your field or that your income takes a serious hit are at least as high as dying, and if you toss skiing, mountain biking, etc where you have lots of high-impact crashes then the disability-to-death ratio has got to be even higher.

 

So - having said all of that - has anyone applied for private long-term disability insurance and had to contend with specific questions/objections concerning climbing or other risky hobbies?

 

 

In the hubris of my relative youth I've been pretty complacent about covering these kinds of risks, despite always making sure that health/home/auto/short-term disability were covered. However, you don't have to dig too deeply into the bankruptcy literature to find out that a pretty siginificant portion of all bankruptcies come about as a result of expenses associated with disease or disability, and the stories about folks that were basically had everything in place except coverage for lost income and lost everything - house, life-savings, family falls apart - are pretty sobering. A few years ago someone pointed out that your most valuable asset isn't your home or your savings, but your ability to earn an income - so I hope to get this sorted out in the next few months and at least figure out what kind of coverage we've got currently and what might need some augmenting.

[bstach]

I have a great disability insurance policy from Great West Life, despite indicating I am a rock climber and backcountry skier. My financial planner who set it up indicated times are changing and insurance companies are more open to people with "adventurous" lifestyles.

 

So my suggestion is shop around until you find someone that will cover you.

 

I live in Canada, btw.

[gertlush]

Try Unum, they're the biggies in the States I think. Bstach makes a good point about insurance companies being more open...there's a 'right' price a for everything.

[hasbeen]

Northwestern Mutual was unwilling to underwrite my long-term diability because I indicated that I was a climber. They did not seem to care about any other of my outdoor pursuits. The interesting thing is that they were willing to underwrite my life insurance, which confirms your suspicion that the actuaries have concluded that you are more likely to get disabled than killed climbing. Unum/Provident was willing to underwrite my long-term diability, for a pretty competitive rate.

[JayB]

Bump. I'm in contact with a broker concerning disability coverage right now, and it looks like the coverage they offer excludes pretty much any of the outdoor-rec activities that my wife and I participate in that are likely to cause disability. If I can't get this stuff covered, I suppose we'll have to just live with it, as were both still most likely to get disabled through disease or everyday accidents than anything that happens while climbing, skiing, etc.

 

I just called Great Western Life, and the person I spoke with said that they haven't sold long-term disability policies for at least six years. I will try Unum Provident tommorow and see what they have to say concerning climbing, etc. If anyone out there is reading this and has had any experience with other insurers who do not specifically exclude climbing and other activities like it when issuing disability coverage, feel free to chime in.

 

Own-occupation coverage that includes climbing? Possible? The broker that I've been in touch with has indicated that pretty much every major insurer excludes climbing and other activities with a similar risk profile, but I'd like to make sure of that before I commit to a policy. Not sure how many climbers this fellow deals with, so it's possible that he may simply not be aware of them. Given that he has a financial interest in selling his policies to me, its also possible that he's omitting this information, but he seems like an honest guy so I'm willing to give him the benefit of the doubt.

 

 

 

[chucK]

Another thing to look closely at is what the disability insurance actually pays.

 

For the one I have, they will pay 60% of your salary, but only for two years. After that point, they say you must get any job that you are capable of getting.

 

There is NO language that specifies that if the only job you can still complete is cold-call telemarketing or 8 hours/week as a Walmart greeter, that the insurance will cover the difference from your previous salary. In the past I have not found insurance companies to pay off more than they put in writing. Thus, I have to assume that this disability insurance will pay off for two years only.

 

If your main worries are climbing/kayaking/driving I would consider looking at accidental death and disability insurance. It's quite cheap compared to standard life insurance. Although, it probably won't pay for loss of income, but would pay if you lost a limb or eye (and of course, if you died).

[JayB]

Definitely good points. Since blinking from a motorized wheelchair while working as a Wall-Mart greeter could very well be considered an employment opportunity that will get the insurer off the hook, you should defnitely look at the "own-occupation." clause of the coverage and make sure that it's adequate. I think that there are policies out there that will cover the difference between your pre and post disability wages after you reach the limit of the "own occupation" coverage period.

 

I'm leaning towards a two-year policy for myself now, given that there are any number of things that I could do that would pay at least as much as I'm making now, in a couple of years my income will probably become a less important component of the household income picture. Things are a bit different for physicians, attorneys, etc - who might not even be able to pay off their student loans, much less their mortgages, car payments, fixed business expenses, etc - in any other field.

[JayB]

One other tidbit I've learned is that if you have group coverage provided by your employer, and they pay the premiums, the benefits are taxable, whereas benefits generated by a policy that you pay for yourself are tax exempt. Or so I understand.

 

For most people 60% of income, free of taxes, is relatively close to their after-tax, take-home pay, so 60% coverage should be enough to cover most of the shortfall.

[ericb]

Jay,

 

Thanks for your thoughts....couple of my own. The reason I'm looking at life insurance vs. ADD/Disability is that in my line of work, standard benefit packages include both. The reason I'd like to lock in a term-life policy now is that premiums will go up with age, and in the event of an illness (cancer) or family event that increases my perceived risk (sibling dying of heart disease) the cost of a private policy will skyrocket, and I could be yoked to my job for the sake of insurance. I'm fine relying on my employers for ADD/Disability as my risk profile can't really increase over time. I have a climber friend that had just this problem. Got cancer at while at his last employer, recovered, and then took a new job. His new employer would not even give him their base (free) level of life insurance because of his medical history. That said, looks like I have some good options to look into. I need to check my work ADD/Disability policies, but I don't recall seeing exclusions for said activities.

 

I saw a comment in my online search that I thought was pretty insightful along the life insurance lines.....Mortgage insurance for those with risky hobbies can be a good bit cheaper than the equivalent coverage would be for life insurance.

[sobo]

Northwestern Mutual was unwilling to underwrite my long-term diability because I indicated that I was a climber.

 

How long ago was that? I have long-term supplemental disability coverage through NW Mututal Life that picks up the 1/3 of my salary that my employer's LT disability benefit doesn't cover. I purchased this policy 15 years ago or so, for a fixed monthly premium of just under $20. The pay-out keeps pace with my salary increases. The agent is a friend and she knows I was a climber then, as now. YMMV.

 

JayB:

My employer covers AD/D for up to twice my annual salary (for my death, less for eyes and limbs), and I have a term life policy thru New York Life that I get as a group policy with my professional society membership (ASCE) as a civil engineer that costs me about $37/month. When my annual society dues ($200+) are figured into the equation, I get a $250k term life policy through a reputable underwriter for less than $55 per month. The best part of this gig is that after two years of claim-free living with this LI policy, it pays 100% of the benefit in the event of my death, NO MATTER WHAT THE CAUSE. That's right, no exclusions, not even risky recreation, not even suicide! It's all right there, even in the fine print. Apparently, New York Life thinks that civil engineers aren't suicidal enough to not cover them.

 

IIRC, you're in the legal biz (yes?). Perhaps you should check into benefits offered by your professional society(ies), if you haven't already done so. You might be pleasantly surprised. And good luck!

[ericb]

Sobo.....55/month for $250 of life is not necessarily that great....$750 can be had for ~ 70$/month for someone with good medical history and no "risky" activities.

[Mr_Phil]

Hey, wouldn't it be great if the gov't could provide LTD insurance for all?

[Kevin_Matlock]

Don't specifically have many details, but I am allowed optional life insurance through my employer.

When I tried getting a specific yes/no answer to "will I be covered in the event of a climbing injury" I was passed on to a bunch of people. Never did get a straight answer, either.

I would advise that if you can, try and get something in writing so they can't pull the old "suicide-exclusion"-type clause on you.

[ericb]

You should be able to get your hand on the policy from your employer that will explicitly state the exclusions. Suicide was mentioned on mine.....climbing was not.

[edoc]

I applied for disability in 1992. I had a serious bicycle accident and was initially turned down. I don't believe the application asked about hobbies but more about past medical history (accidents, surgeries, etc) My policy (Provident) is one of the old ones, it will cover to age 65; most now will not. I also have a supplemental policy from NW also. I think most policies now exclude for disability from "adventurous" hobbies. The disablity insurers have really tightened up to reduce their exposure.

 

You are better of dead than disabled. Disability will drain your families financial resources, until you have nothing, then you'll qualify for Medicaid (federal insurance for those qualifying by financial need). If you're dead then your spouse can remarry. Long term disability is something I never thought about until my accident left me within a hair of being gorked

[JayB]

Good info. Thanks for sharing. Does the "edoc" handle mean that you are an ER doc?

 

If so any word on how your colleagues who have come into the profession more recently insure against income loss? Disability is a scary enough prospect on its own, but servicing the debt that most residents carry along with them into practice would be pretty much impossible working in any other capacity, unless perhaps they've picked up an MBA along the way. Given the number of M.D.s and attorneys out there with substantial debt and business obligations that also ski/climb/whatever - there must be some kind of supplementary insurance that they are using to cover themselves against disability brought about by the kinds of risks that are typically excluded from coverage.

 

 

[sobo]

Sobo.....55/month for $250 of life is not necessarily that great....$750 can be had for ~ 70$/month for someone with good medical history and no "risky" activities.

 

If that is true, then please provide a link to this oasis in the desert. Remember, though, that I do engage in what LI underwriters would consider "risky" recreational activities - check my bio. Of that, I cannot lie or hide, nor do I wish to.

 

If I really can get another half-million in coverage for an additional Jackson per month, I'd be all over it. Unless, of course, they don't pay when I get killed doing something "risky", which my current insurance would cover.

 

And your statement above makes no sense whatsoever in light of your statement below, which is cross-posted from your very own Life Insurance for Climbers thread:

...I recently met with a financial planner and realized that my current life insurance policy (work benefit.... X times salary) was probably inadequate to protect my family in the event of my untimely death, and have been doing some research on term life insurance. I've been very loyal to my current insurance company, but admitting to 1) "Climbing a mountain" or 2) "rock climbing" in the past 3 years or planning to in the next year jacked my premium from ~ $68/month to almost $232/month....Ouch.

 

This is exactly what I ran into (although mine went from ~$50/month with no "risky" activities into the low $300's per month once I 'fessed up to climbing, sailing, and diving) with State Farm. They are my company of choice for all of my other insurances (auto, home, personal articles, etc.), except for life insurance and supplemental long-term disability. Those are New York Life and NW Mutual Life, respectively. As stated above, the NYL policy is though a group policy through ym profession. I don't think I'd get such a good deal if I went it alone.

 

[edoc]

Good info. Thanks for sharing. Does the "edoc" handle mean that you are an ER doc?

 

I'm a vagabond of sorts, jack of all trades

 

If so any word on how your colleagues who have come into the profession more recently insure against income loss? Disability is a scary enough prospect on its own, but servicing the debt that most residents carry along with them into practice would be pretty much impossible working in any other capacity, unless perhaps they've picked up an MBA along the way. Given the number of M.D.s and attorneys out there with substantial debt and business obligations that also ski/climb/whatever - there must be some kind of supplementary insurance that they are using to cover themselves against disability brought about by the kinds of risks that are typically excluded from coverage.

 

I think one can get insurance for anything. All types of insurance policies can have exclusions and limits. I happened to get a good policy, my only exclusion is disability for being MENTAL. BUT every company is different as to premiums length of beni's, and exclusions. If you suffer disability b/c of excluded activity you're hosed. Read the fine print!

As for debt, getting disabled in the 10 years after training with substantial debt, you are once again hosed.I think disability in the face of substantial debt is not on the radar screen of most recently graduated professionals (MD, JD, MBA, etc). One is too proccupied with work, feeding kids, etc. When young we never think about needing life or disability insurance It's a real gamble. I guess be frugal, have your spouse work, and keep debt down. But I went to a state school where tuition was $1600 a year instead of $20000+ at say Wake Forest (1988 dollars)

 

Funny thing is I almost cancelled my health plan 3 months before my accident. I'm glad I didn't, bills were about $35k (1991 $)

Insurance, we all bitch about it but when we need it it comes in handy. I hate to sound like an add for "the ones who collect $ but hate giving it away" but life is risky. I do too much "foolish" (as my mother says; "You have a femily to take care of!") stuff but ones needs to think about these things because a bad disability will cripple your family. Plus bro's, who sell me my insurance, told me to say this. Thats why they belong to the country club and I don't (though I'm not much on that anyway).

 

BTW Travelers sucks

Edited December 21, 2006 by edoc

[mothboy88]

Hey, wouldn't it be great if the gov't could provide LTD insurance for all?

 

They do. Social Security Disability Insurance (SSDI). But you are not going to be living the high life on SSDI.

[edoc]

Hey, wouldn't it be great if the gov't could provide LTD insurance for all?

 

They do. Social Security Disability Insurance (SSDI). But you are not going to be living the high life on SSDI.

 

SSI or Supplemental Security Income ain't a whole lot, maybe $600 a month. But it is reduced if you recieve food stamps or housing assistance. Being on the public plan means no more vacations, UNLESS you work under the table (as many patients have do) or sell your Oxycontin that you get for your chronic back pain. Oxy's go for $1 per mg on the street so if your on 80 twice a day your looking at $4800 a month or $57600 a year TAX FREE. And that ain't chicken scratch. You can probably keep on climbing. Just don't get caught. You'll be somebodies biatch in fed pen.

[mdidriksen]

Sobo:

 

I'm paying about $550 a year for $1M in term life coverage, with climbing disclosed to the insurer, so keep shopping. I bought the policy 4 years ago, so ymmv.

 

MD

[ericb]

what insurance company?

[zl27]

I have a fantastic disability policy through a credit union for $25 per month. It even pays the equivalent of a salary for a family member who stays home to care for you (very rare for such a low price). I am/was not a member of the credit union; my mom was a member through her employer (a utility).

 

Btw, they didn't ask any questions about my hobbies.

[zl27]

Some info from the IRS faq:

 

Generally, you must report as income any amount you receive for your disability through an accident or health insurance plan paid for by your employer.

 

If both you and your employer have paid the premiums for the plan, only the amount you receive for your disability that is due to your employer's payments is reported as income. If you pay the entire cost of a health or accident insurance plan, do not include any amounts you receive for your disability as income on your tax return. If you pay the premiums of a health or accident insurance plan through a cafeteria plan, and the amount of the premium was not included as taxable income to you; the premiums are considered paid by your employer, and the disability benefits are fully taxable.

 

Amounts you receive from your employer while you are sick or injured are part of your salary or wages. You must include in your income sick pay from any of the following:

 

- A welfare fund.

- A state sickness or disability fund.

- An association of employers or employees.

- An insurance company, if your employer paid for the plan.

 

Payments you receive from qualified long-term care insurance contracts will generally be excluded from income as reimbursement of medical expenses received for personal injury or sickness under an accident and health insurance contract. Also, certain payments received under a life insurance contract on the life of a terminally or chronically ill individual (accelerated death benefits) can be excluded from income.

 

Edited December 21, 2006 by zl27

[sobo]

Sobo:

 

I'm paying about $550 a year for $1M in term life coverage, with climbing disclosed to the insurer, so keep shopping. I bought the policy 4 years ago, so ymmv.

 

MD

 

Ditto ericb's question: Which company? Help me narrow the search.