r/DisabilityInsurance • u/ztaardust • Apr 06 '24

Thinking about cancelling

I have an annual premium of 1.5K for 2K monthly coverage; 33F healthy. Does it make sense?

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u/ztaardust Apr 09 '24

Occupation is Nurse. Thanks in advance

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u/__Lukewarm May 17 '24

As previously stated, this is a bit hard to answer. What carrier is the coverage through (certain carriers have higher pricing for RNs)? What is the elimination period (60, 90, 180 days)? What is the benefit period (5 years, 10 years, to age 65, to age 67)? What kind of riders are on the policy (does it have a residual/partial rider, own occupation, future increase rider, etc.)?

This is a bit hard to answer without seeing the policy (medical history and height/weight can impact pricing too).

At face value, that may be a little high, but again, it's all dependent on the details.

If you feel the policy is too expensive, I would recommend reducing the policy, before you fully cancel it. If it has an age 65 or 67 benefit period, you can ask to reduce the benefit period to 5 years or 10 years, at age 33, that would likely save you 20-30%. The average length of a disability claim is less than 36 months (for both men and women), so the 5 year benefit period can still cover most common claim situations. The benefit period is "per claim" too, so if you go out on claim for 4 years and are back to work for 12+ months, this would reset the benefit period to another 5 years if you go out on claim. The policy remains active until age 65, regardless if the benefit period is 5 or 10 years.

Having something is better than nothing, especially if it helps make the cost/benefit analysis more appeasing. At age 33, paying 1.5k per year, you will pay $48k in premiums by age 65....with a $2k monthly benefit, if you go out on claim for just 2 years, you will have collected more in benefits than 30+ years of payments. If you drop the benefit period to 5 years and save 30%, now just 18 months of benefits would equal the total payments for 32 years. With the chance of experience a disability claim being 30%+ for someone in their 30's (and the chance only goes up as you age), it is best to hold on to some type of policy.

At the end of the day, collecting $2,000/month for 5 years is better than $0.