UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next
Author: TMFCookie Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 17921  
Subject: Contrarian view of disability insurance Date: 6/8/2000 8:13 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
For 4 years when I had no company-paid disability insurance, I considered buying an individual plan but never did. My rationale follows:

Risk of disability
The disability statistics showed a 20% chance of a 3 month or longer disability by age 65. However, I planned on having enough to retire by 55 and the chance of disability by 55 dropped to 10%. If I purchased a disability policy, I would taken at least a 180 day waiting period and I was prepared financially for a whole year. I guessed that disabilities lasting over a year would drop the chance to 5%. I considered that disabilities from automobiles would be covered by auto insurance, that I had less hazardous job and hobbies than most, and I hadn't suffered any disabilities so far. So, I guessed my real risk of an uncompensated, long-term disability was closer to 1%.

Policies
The policies I considered cost anywhere from $1000 to $1500 a year (with a 180 day waiting period) depending on which riders were added. My expected monthly benefit would have been $3000 a month. I questioned how easy it would be to collect as I read the language about the ability to do my current work or do work within my profession.

Source of income
If I were disabled, I considered drawing the interest from my retirement fund (using lifetime payments to avoid any IRA penalties). If necessary, my wife could have worked full-time. If necessary, my Mom would have provided several hundred dollars a month. All of these potential sources greatly exceeded the income I would have received from a disability policy.

Conclusion
I decided to invest the money I would have spent on disability insurance into my retirement. I know this approach is contrary to the advice recommended on this site and by most most financial experts but I share my rationale so that others may examine all recommended advice in light of their own unique circumstances.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next

Announcements

Post of the Day:
TMFDeej's CAPS Blog

Activist Investors Unlocking Value at LSB Industries?
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement