Launching: Disability Insurance

dadx
Mon, 24 Oct 2016 15:13:24 +0000

This is bringing back memories.

Decades ago, I bought some disability insurance, although it took some negotiating. I thought the premiums were far, far too high, and the coverage was too little. The reason was that the sales pitch is: “We start paying instantly when you have to miss work, and we pay for an entire year.” (or something like that).

My counter was: Look. I can take care of myself if I miss 6 months of work or so, since I save, and since I don’t spend a ton. I’m concerned about being permanently disabled for the rest of my life. The odds of that are quite low, and I ought to be able to buy a decent insurance policy to cover it at a low cost.

Agent counter: Well, statistics show that the vast majority of disability cases are either back to work after a year, or they are dead.
)
My point: Yes, and I want coverage for that very very rare instance where I’m still disabled and alive. How about you write a policy that doesn’t start until a year after I’m disabled? I’ll take care of myself for the first year.

We ended up with a policy written that way, and it was very affordable.

This is the problem with much of the “insurance” that we have today. It covers things that you know are going to happen with a fairly high likelihood. It changes the nature of it from insurance into “prepaid expense” programs, which are hugely expensive, and don’t make much sense. (Although people like them because they mistakenly think they are getting their money’s worth. )