On Episode 45 of the Your Financial Pharmacist Podcast, YFP team member Tim Church and Certified Financial Planner Tim Baker discuss some of the key features of disability insurance and walk through how to get the right coverage.
PolicyGenius
Several reputable companies offer disability insurance but it can take a lot of time and energy to get multiple quotes. YFP has partnered with Policygenius, an online independent broker to help you quickly shop multiple companies for the coverage that’s right for you. They have a very user-friendly interface and their team will help you through the entire process from application to signing a policy. You can even get an estimate without entering your personal information https://www.policygenius.com/yourfinancialpharmacist
Episode Transcript
Tim Baker: What’s up, everybody? Welcome to Episode 045 of the Your Financial Pharmacist podcast. I am taking the host seat today. And I’m joined by Tim Church, who hasn’t been on for quite a bit. Today, we’re going to be talking all about disability insurance. Last week in Episode 044, Tim Ulbrich walked down the path for him and his family, talking life insurance and term life insurance, more specifically. So this week, to kind of continue on the insurance theme, we’re bringing on Tim Church, and we’re going to talk all about disability insurance, what that picture looks like for him, how to basically price disability insurance and what that looks like, and hopefully you walk away from this episode with a little bit more confidence in the disability insurance arena. So Tim Church, welcome back to the podcast.
Tim Church: Thanks, Tim. Great to be back on as always. I thought you guys did an awesome job last week talking about life insurance. And I think that and disability insurance are probably some of the least sexiest personal finance topics, maybe just a step above taxes, but obviously, I think it’s something that’s important.
Tim Baker: Yeah, it’s funny because like when I meet with clients, you know, one of the things — and we’ve talked about this in terms of how I price working with clients, it’s about income and net worth. So you know, what I tell clients is when I give them recommendations, I’m trying to figure out, OK, what’s the best way to help them grow and protect their income and grow and protect their net worth while keeping their goals in mind. And the life insurance and the disability insurance are all about that. And it’s definitely — I know you guys talk about in the “Seven Figure Pharmacist,” it’s definitely a defensive posture because you’re basically trying to protect what you have. So it is super important, and I think it’s one of the more overlooked things that pharmacists, at least in my experience, will have in place with their financial plan. So we’re going to get into disability insurance and kind of unpack that whole issue. But before we jump into that, why don’t you tell everyone what’s been going on with you and what you’ve been up to since the last podcast?
Tim Church: Well, I’ve just been kind of hanging out here down in Florida, getting some nice weather, starting to warm up. But other than that, I’ve got three words: Student loan course. So basically, I’ve been knee-deep, trying to get everything ready for our beta group that’s going to be starting in a week or two here. And really, it’s just been a labor love and really excited to see it all come together. Looking back when we first started out the outline, I think I underestimated and think all of us did, all the moving pieces that were going to be required to get it up and running and how many Saturday morning marathon sessions that you and I would have. But basically, you know, it’s been fun. And I think it’s interesting how every time you and I talk, we somehow keep adding more and more content. But CEO Tim Ulbrich is basically putting the hammer down and saying, we’ve got to get to the finish line, which I think is a good play.
Tim Baker: Yeah, and when we had our last T3 conference kind of in Baltimore, this was one of the big points that we were working on is working through the course, and it’s always great to have you and Tim in Baltimore and working through this stuff. I think when we did that way back when, I don’t know if it was March or February or when it was, but we thought we were pretty close, and then we looked at it some more, and we’re kind of at the point where we’re shaving the ice away from this perfect statue, this ice statue. So yeah, I think for me, I just need to sit down and get my videos finalized. I feel like they’ve been there waiting to be recorded. So I’m anxious to get that done, and I think that will be done this week. But we still have some spots left for the beta group, so if you still want to get in on that, it’s 50% off, so you can go to courses.yourfinancialpharmacist.com and enter code LOANRX. So go to courses.yourfinancialpharmacist.com and enter code LOANRX, and that’s for 50% off. And what we’re really trying to get at here is is this course delivering everything that we say it will? And basically, what we believe that this course will do is for one of the major pains for pharmacists, 89% of pharmacists that graduate pharmacy school will have loans is really to provide some type of clarity with their loans in terms of inventory, what they actually owe, who they owe, inventory their feelings about the debt, and then come to a strategy that basically fits their situation and what — there’s a lot of information and sometimes misinformation out there in terms of the student loans and the forgiveness programs out there, and then really how to optimize your situation and get everything you can, either out of forgiveness or even a nonforgiveness strategy. So Tim, do you have anything else to add on student loans before we jump into disability?
Tim Church: No, I think you covered it pretty well. I mean, just excited to get it off the ground. I think it’s going to provide a lot of value to people.
Tim Baker: Yeah. So do I. OK, so let’s get into this. So I think one of the things that we probably should talk about first — and I think this is one thing that we often talk about with financial planning in general is why should we have disability insurance? So Tim, for your particular situation, you know, you look at your financial picture. What are the big reasons why you think disability insurance is important?
Tim Church: Well, I think what it comes down to simply is could I survive if I suddenly was unable to work? And whether that’s because I got in an accident or because of an illness. And at currently, basically it’s not going to happen. My wife and I are dependent on me bringing in an income right now. And she works as well, but it would be very tough, especially with still paying off her student loans and just to be able to live the lifestyle that we currently have. So I think that’s really the biggest thing when I think about disability insurance.
Tim Baker: Yeah. And I think for a lot of people, one of the things that we mentioned in the lead-up here was that for a lot of pharmacists and really, young professionals, it’s one of the things that is often overlooked. And I think part of it is is that feeling of invincibility, part of it is it just doesn’t make the cut when we talk about all the things that we have competing for our income. But it is really imperative that pharmacists have it in place. And like we say time and time again, the average pharmacist will make $9 million over the course of their career. $6 million of that will flow through their bank accounts. And you know, our listeners, Tim, you and Andrea, you guys spent a lot of money to get this degree, which affords you the ability to earn more than kind of the average American. So I think it’s best to protect that. And outside of kind of the time factor with a lot of my clients, their second biggest asset is their ability to earn. So I think a proper policy in place, whether it’s between the employer-provided or a supplemental disability policy, which we’ll get into, I think it’s imperative for this part of the equation. And just to give you guys some context, you know, life insurance is typically — I don’t want to say it’s the sexy part of insurance because I don’t know if there is a sexy part of insurance — but life insurance, typically when people think of insurance, I think, you know, and buying policies, they think of that because it’s, oh, I have a $1 million policy or a $500,000 policy. It resonates more with people. But disability, you know, disability insurance I think is as important, if not more, in the sense that you know, according to the Social Security Administration, 25% of today’s 20-year-olds will become disabled. And I think it’s for a period of at least three months before age 65. And we know that a lot of people out there don’t have the prerequisite emergency fund or things that they can do to survive that three months or even beyond. So again, it’s important to have that policy in place.
Tim Church: And I find, Tim, is that a lot of my friends and colleagues, they seem to be very underinsured in this area. And when I say that, I mean they basically either don’t have a policy or something that’s very minimal, and I think it kind of goes back to that feeling that you know, you may be young and healthy or that something really bad would have to happen, but what’s interesting is I actually personally know some pharmacists who became disabled and couldn’t work for over a year. And a couple of those were really freak accidents where they experienced some head trauma and basically, they had cognitive deficits and they weren’t able to work because of it. And I know another pharmacist, she actually had really bad rheumatoid arthritis. And that really put her in and out of work, and sometimes she was only able to work part-time. But these are actually real cases that I know of where I don’t know their situation, but essentially, they would have needed disability insurance unless they had some significant wealth already accumulated.
Tim Baker: Yeah, and it’s crazy — and I shared this story last week about a colleague working with clients that were widowed or widowered — I don’t know if that’s a word — but basically, they had life insurance in place, and thank goodness that they did because they had three young kids. But you know, this usually hits home when you know someone or you have real life experience. And it’s really not a question of if, it’s when for people to come into contact that are going to go through this type of thing. So you always think that it’s going to happen to someone else, and I think there’s a bias out there, and I should know what that bias is, but you always think it’s going to happen to someone else until it happens to you.
Tim Church: Overconfidence.
Tim Baker: Yeah, and maybe it is overconfidence. So I think it’s definitely important to kind of hear that and just take — like again, a lot of our listeners, you guys have worked so hard to get to a point where you can earn that six-figure income. And you want to protect it for the sake of your lifestyle and for your family, you want to make sure that you’re protecting that. And it really doesn’t take much in terms of effort to kind of get the protection that you need. So hopefully, this episode brings a little bit more clarity to that. And I know you guys brought it up in “Seven Figure Pharmacist” quite a bit. I think it’s hopefully something that, you know, maybe after the third or fourth time of us talking about it, it empowers our listeners to get that insurance in place.
Tim Church: Yeah, and I’m always curious as to the reasons why people don’t. And I think we talked about just that feeling of invincibility, especially if you’re young. But I think the cost also sometimes deters people. When you look at life insurance and some of the other insurance coverages, we’ll get into this, but disability insurance is a little bit more expensive than some of those. And so when you look at just the cost itself, you’re looking at that and saying, ‘Wow. Can I really afford that much extra?’ But then you have to look on the flipside is really can you afford not to have it?
Tim Baker: Yeah, and it should just be baked into your monthly budget, in a sense. And one of the things of life is that, you know, back in the day, you know, your employer used to cover it just like they covered a lot of other things, and it’s not necessarily the case anymore. So again, it’s very important to kind of take control of the situation and get the type of policy that is going to work for you. So what do you think, Tim? Do you think we should kind of break down the types of policies?
Tim Church: Yeah, let’s unpack that. I mean, one of the things that I’ve seen just in my own research and things that we got ready for “Seven Figure” is that disability insurance policies can be very complex. There’s a lot of extra features, add-ons, things like that. And I know when I applied for coverage before, it was like buying a car. You have your base model, and then there’s like 20 upgrades, features, things you can add. So Tim, can you kind of break down the two basic types of disability insurance?
Tim Baker: Yes. So the two broad types of disability insurance are going to be what’s called short-term disability and long-term disability. And I would say not to get caught up in the semantics of what short-term and what long-term is. It’s kind of a moving target for every carrier, every company out there. Essentially, what you want is a policy that covers you in the event of your disability. And we’re going to talk through some of the different aspects of that. Typically, you want a longer term disability policy in place that will last a period of years, if not until basically retirement age. But there are other policies out there that are more kind of stop gaps that a short-term policy would fill in for. So those are the two broad ones are short-term disability and long-term disability.
Tim Church: And wouldn’t you say, Tim, that when you’re looking at kind of that benefit period or the time that you would have the disability insurance coverage, it really kind of comes down as how long would you actually need those benefits in terms of you know, could you accumulate enough wealth by the age of 50, 55 and maybe not need it all the way until retirement? So you could break it down, if you wanted to, in terms of where you would expect to be retired or when you would actually need that income support. Is that a good way to look at it?
Tim Baker: Yeah, I mean, I think what I often say is that I would recommend just like we would recommend an emergency fund or life insurance policies or whatever, I’m going to recommend basically what the textbook suggests. So typically, the textbook would say, ‘Get a long-term disability policy that would last until your Medicare age,’ which would be like 65 — I think it’s 65 — until retirement. So typically, that would be where we would start with a client. And then from there, you know, you might look at that policy like, ‘Gees, Tim, that’s like really expensive. I don’t think I’m prepared for that.’ And that’s kind of when we start looking at some of these other variables that we’ll get into or these key features that we’ll get into that we can slide around to see, OK, what is more in line with your budget. But typically, the textbook would say, ‘Have a policy until retirement age.’
Tim Church: Gotcha. And then when we talk about how much coverage you actually need, when you break that down, so how do you usually walk through clients to talk about the actual needs?
Tim Baker: Yeah, so typically, you’re going to want roughly around 60% of your gross income. So that is before taxes are taken out. And typically, it’s quoted or it’s priced based on monthly amount. So if you make $10,000 per month, you’re going to want something that’s going to cover you for around $6,000. And the reason that that is is you know — and it depends on who is actually buying the insurance, whether it’s you or your employer. It depends on if your employer buys it, then the benefit comes to you taxed. If you buy it, so you’re buying a policy with after-tax dollars, the benefit comes to you as tax-free. But 60% is typically the number that you’re going to want to look at. But again, it’s the same thing with the coverage period. You might get to that point and you say, ‘Wow. 60% until I’m retired is going to cost me this much.’ And that may be where you say, ‘Well, I can probably get by with 50% or 40%,’ and it’s basically a conversation that I have with clients. Obviously, I want to push them to protect as much of their income as they can, but at the end of the day, it is a cash flow concern.
Tim Church: Yeah, and it comes down to also too what kind of lifestyle would you want to have if you become disabled? And do you need that amount? And I guess that’s probably where you can talk with your clients about determining maybe some more specific needs, client-to-client and just kind of asking, do you want to maintain your current lifestyle? Would you be OK if it was reduced a little bit?
Tim Baker: Right. Exactly. And then that’s kind of where you know, the more of the human side comes into it is if a disability event were to happen, what do you see yourself doing and that type of thing. And how do you see yourself living.
Tim Church: Yeah. So we talked about coverage amounts. So the percentage of your income that you’re actually getting a policy for, so that’s going to have a big impact on the cost of the policy. And then also how long those benefits that you would actually receive. And then the next thing that comes into play a lot is the elimination period. So basically, what’s the waiting period between the time that you put a claim in for your disability and you actually receiving benefits. And sometimes, I think that’s where it can be interesting to talk about do you need a short-term and a long-term disability policy? Or could you just have the long-term disability policy? And I guess that really comes down to is whatever that elimination period is that you choose, is do you have a good emergency fund to cover you in that gap or that window?
Tim Baker: Right. So the elimination period or the waiting period or you could think of this as like a deductible that you pay in time before your benefit gets to you should match pretty closely to what your emergency fund is. So if your emergency fund reserves is for three months, 90 days, which I think is typically best practice, especially for a dual-income earner, that’s probably where your elimination period can come out. But again, you can toggle this in a way that you can get policies that have elimination periods after 30 days or you can wait a whole year, and that basically makes the period or the premium a lot cheaper if you wait a year. But then you’ve got to ask yourself, if I become disabled, can I wait a whole year to get my benefit? And for a lot of people, it’s no, but it depends, again, on a case-by-case basis. I would say best practice is probably look at 90-day, so a three-month waiting period once you submit your claim and then price the policies from there.
Tim Church: One of the other things that typically comes up on policies for disability insurance is own occupation or gainful occupation. So can you talk a little bit about that, Tim?
Tim Baker: The big definitions — so these are basically definitions of disability. So your policy is going to have a definition. And the big ones out there are own occupation, which is basically the inability to engage in one’s own occupation, so like a pharmacist. And that’s typically the most expensive because it’s basically the most limited in terms of your ability to receive that or the most inclusive for your ability to receive that benefit. And then there’s something that’s called any occupation, typically referring to is basically if your policy is any occupation or any occ, you might hear, or own occ. Any occ is the inability to engage in any occupation. So this is if you’re a pharmacist, Tim, if you have a policy that is any occupation and you become disabled, but you can’t necessarily be a pharmacist. So maybe you have some, like you said, cognitive disability, but you can still be a greeter at WalMart, as an example, then your claim for your disability insurance would be denied because they could say based on the definition of disability, you can still hold gainful employment, but you just can’t do what you’ve been trained to do. So any occupation is one that is more liberal in terms of your durability to say whether you’re disabled or not. And to me, I would say this would be one that’s definitely kind of a nonnegotiable. I would want clients to make sure that you have an own occupation because think of all the things that you could theoretically do for work. And for you to be denied that benefit would be a tragedy, I think.
Tim Church: Yeah, and it kind of goes back to what we talked about. I mean, how many years of school and training do we go through in order to be able to generate that income? And so of course, you’ll want to protect that and that ability to make that salary.
Tim Baker: Yeah, and some of the other definitions out there that you might see would be like modified any occupation, which would basically be inability to engage in any reasonable occupation that one might be suited by education, experience and training. So that’s maybe kind of an in-betweener. And then the other one you would see is social security definition of disability, which is probably the most stringent. And they basically define that as a mental or physical impairment that prevents the worker from engaging in any substantial gainful employment. The social security definition of disability is the most stringent. So if you have a policy that follows that guideline, you’re definitely going to want something outside of that policy to cover yourself.
Tim Church: Before we continue with the rest of today’s episode, here’s a quick message from our sponsor.
Sponsor: As a pharmacist, you’re going to make millions of dollars over your working career, and you’ve worked hard to get where you are. Take a minute to answer this question: Would you be able to support yourself and your family if you were suddenly unable to work because of an accident or illness? Disability insurance provides you with money to cover your bills and expenses if you’re unable to work. Your employer may offer some coverage, but it may not be enough, and it may not follow you if you were to change jobs. That’s why it can be a good idea to have a private, long-term, disability insurance policy. We want to provide the YFP community with an easy, one-stop solution to help you get the coverage that you need. Therefore, we have partnered with PolicyGenius, America’s No. 1 independent, online insurance marketplace, so you can quickly get quotes from reputable companies rather than wasting time having to make phone calls and shop multiple websites online. You can get your estimate today by going to yourfinancialpharmacist.com/insurance. That’s yourfinancialpharmacist.com/insurance.
Tim Baker: Now back to the Your Financial Pharmacist podcast. So Tim Church, I know we’re talking lots about these different features. Why don’t we jump onto PolicyGenius — and actually, listeners, if you go to yourfinancialpharmacist.com/PolicyGenius, you can actually go through the process that I’m going to take Tim Church down. And just to kind of reiterate this, I talked about this with Tim Ulbrich in terms of the life insurance. You know, one of the reasons we like PolicyGenius is because when you get on there, you’re quickly seeing how clean their interface is. So a lot of these insurance companies that I worked with in the past, you know, their websites are difficult to navigate and just not great. And I guess I’m more of an Apple snob, so I like nice, clean interfaces. And they don’t disappoint in this regard. I think more importantly, you know, from being a fee-only guy, not really liking the commissions, their agents that you might interact with do not get paid a commission. They’re basically paid a salary, so not really incentivized you to put you in a policy that is going to be in your best interests and not yours. And then the other thing that I like is they’re more or less a broker. So they can go out to all of the best companies out there and price the insurance carriers and quote the insurance carriers from across, basically across the board. So you know, for these reasons — and I would say too is when I work with them for clients and I’m sure with our listeners, if you have a question — and the education centers there are great — but if you have a question about your policy or about the process, super eager to help and super responsive, even if you have existing policies, they’ll look at that and kind of give you some advice. So I’ve been nothing but impressed with them in terms of being a good partner for Script Financial and I know with Your Financial Pharmacist, I think they’ve taken care of some of our listeners out there, and we appreciate them and their place in the space of insurance. So Tim Church, are you ready to kind of hop on here and do this thing?
Tim Church: Yeah, let’s do this.
Tim Baker: OK. So again, you can go to yourfinancialpharmacist.com/PolicyGenius and basically, follow this. And Tim, the first page is going to basically take us to life insurance or disability insurance. So obviously, we’re going to go through disability insurance on this episode. So you are a male, what is your date of birth?
Tim Church: 08/14/1985
Tim Baker: You reside in the state of Florida.
Tim Church: The Sunshine State.
Tim Baker: Alright, so the next page is going to be talking about your occupation. So what’s your occupation, Tim? I forget.
Tim Church: Professional drug dealer.
Tim Baker: Alright, so pharmacist. You do work at least 30 hours this week in this occupation, which is unfortunate. How many years have you worked in this occupation?
Tim Church: So a little over seven.
Tim Baker: OK. And then highest level of education? So we have basically JD or MD or PhD.
Tim Church: We’ve got to get on them about that, about putting a PharmD selection, right?
Tim Baker: Yeah, I’ll write a strongly worded email. And then your individual income, so don’t income from a spouse or partner. So what’s that?
Tim Church: So base salary is about $125,000.
Tim Baker: OK, $125. And we’re going to assume no existing coverage. So let’s hit next here. OK. So basically, we’re going to be talking about selecting your monthly benefit. So the default here will default to 60%, which is basically the textbook recommendation. So if you pay the premium, which you will in this case, you’re going to get all of the benefits. So in your case, the recommended benefit or 60% is going to be $6,100 per month.
Tim Church: And that sounds pretty close to what actually my net take-home pay is. So that seems pretty reasonable or realistic of what I would need.
Tim Baker: Right. And that’s kind of the idea is to match that. Now, you know, listeners can’t see this, but on the page, basically it says for a 42-year-old male living in Florida, the monthly range, so this is kind of the first place where you’ll see kind of a quote, so that is $111-151. And the plan features, it says existing coverage of $0, benefit amount of $6,100, a waiting period of 90-days and the benefit period up to age 65. And then this is own occupation, residual disability coverage, which we’ll talk about, and then non-cancellable feature, which we’ll talk about. So this is kind of like the first page where you see more or less, it gives you an idea of where we’re going. So it asks the question, do you expect your income to increase significantly over the course of your career?
Tim Church: I hope so.
Tim Baker: So we’ll put yes. And the reason that we do this — and this is a good point maybe to discuss briefly about employer-provided disability insurance and then basically individually owned disability insurance, which is what we’re doing now. So if you were to answer yes to this question, basically they’ll run quotes with a future increase option, which allows you to increase your benefit amount when your income increases, regardless of any changes in your health status. So the example here is if Tim knows that “Seven Figure Pharmacist” is going to continue to sell, and you’re going to sell it to every pharmacy school out there, whatever the case is, and you’re making a lot of money, you want to make sure that your benefit matches kind of the income that you’re pulling in. So that option gives you the ability to buy more. Secondarily, if you have an employer-provided benefit, they’re going to pay you some type of benefit, which is going to be taxed because they pay the benefit of the premiums, but if you were to leave that job, and you go to another pharmacy job that doesn’t provide disability insurance, then the policy that we’re buying now will give you the option to basically buy more or a future increase option to kind of make up the gap. So basically, that supplemental policy that you would buy now becomes your main, your primary policy and will make up the gap in terms of what you need. So hopefully that makes sense to our listeners out there. So now we’re going to talk about the waiting period. So this is basically that time deductible. And this particular tool will default to 90 days. So policies have waiting period of anywhere from 60-365 days. So if it’s a 60-day waiting period, then that’s typically a higher premium because you’re getting your benefit quicker. If it’s 365 days, you’ll get your benefit a year out. And that’s typically makes the policy a lot more affordable. So Tim, what would you like in terms of your waiting period?
Tim Church: Given I have a pretty decent emergency fund, let’s go put that at 180 days.
Tim Baker: OK, so you’re going to move it out a little bit. OK, so then the benefit period, so basically this is how long the policy will pay you if you become disabled. So policies typically have benefit period of two, five, 10 or up to retirement age, which could be 65 or 67 for a lot of our listeners. Obviously, the longer the period, the higher the cost of the benefit. So what would be a good age for you, Tim?
Tim Church: So I think the default of 65, that’s a good place to start.
Tim Baker: OK, I agree. OK. So then this next page is basically wrapping it up. So it does include own occupation, so this is your occupation. It also asks you about a residual disability. So basically, these are riders or clauses in the disability, and what the residual disability asking you is basically saying, do you want to be paid for partial disabilities that could potentially cause loss of income but doesn’t necessarily prevent you from working completely. So typically, the default here is to say yes. And then the final question is do you want it to be non-cancellable, which basically means as long as you pay the premiums, the insurer can’t cancel the policy or change the premiums or change the benefits. So you basically lock into all aspects of your policy. So typically, you want that as a yes as well. So is that good, Tim?
Tim Church: Yeah, that sounds good. And I was wondering, Tim, if this is a good point to talk about that if you have coverage through your employer only, and let’s say you switch jobs and your new employer doesn’t cover that and you have to get your own policy, you’re probably going to also have a health evaluation. And if you’re not as healthy as you were when you had the previous policy, this could really have a huge impact on cost and your ability to even afford a policy like that. And so even like life insurance, this may be a point where it’s good to even have something outside of your employer, just so you can avoid having the reevaluation.
Tim Baker: Yeah, it’s a great point. So that particular rider, I think if you know that potentially could happen to you or you suspect that could happen to you, I think it’s good to have that in there, so that’s another great point. And actually, Tim, the next part of this just basically asks you some basic health details. So unfortunately for these policies, pre-existing conditions are not covered. So if you have something that could potentially disqualify you, you know, as an example, if you have arthritis and then you submit a claim for arthritis, that won’t be paid by the insurer. So that’s something to be aware of. So the next question, Tim, is going to basically ask you about some conditions like asthma and sleep apnea. I know you’re a healthy guy, so instead of kind of listing all these out, we’ll just skip through those. Is that cool?
Tim Church: Sounds good.
Tim Baker: OK. So now we basically get to the end here, and your quote for long-term disability coverage is going to basically be $115 and $155. You’ll receive a benefit of $6,100 a month up to age 65 after a waiting period of 180 days. And then, and this page, you basically can toggle your all those things that I just listed out, so if you say, ‘Hey, I can get by with $5,000,’ or ‘I want my waiting period to be 90 days,’ it’ll adjust that period. But from there, you basically will go out and put in kind of your name and your email and some contact information to go get actual rates from, you know, insurance carriers like MassMutual or Guardian or some of the other ones that are out there. The tool is great in terms of giving you an idea of where you’re at to get rate proposals and actually receive those and then move forward on your policy. So Tim, does that give you a sense of kind of the process forward for disability insurance?
Tim Church: It sure does. And I think one of the things to mention here, Tim, is that if you use PolicyGenius to get life insurance, you can actually get quotes from individual companies. But for disability insurance, it’s a little bit different because you’re going to get a range of what it could cost you. And basically, PolicyGenius looks and they partner with some of these companies, and they’re trying to find you the best deal. And that’s something that one of their agents will actually provide to you.
Tim Baker: Yeah, and basically, they explain that on the website of why is it a range instead of an actual price. And they’re going to look at all the different riders and things like residual disability and own occupation, and the proposals will try to get that back to you in terms of what the policy offers. So it’s a good point. You know, one thing that I do want to circle back on before closing up here for the day — one thing I do want to circle back on is you know, a lot of pharmacists out there do have disability policies, and you know, how does this all play into, you know, buying your own? So I would say in general, you typically, if you do have a long-term and a short-term care disability policy through your employer, I view that as a benefit. OK, so Tim Church, your quote comes out to between $115-155. Is that more or less what you expected when we started going through this process?
Tim Church: Yeah, I mean, that’s essentially pretty close to what I’m actually paying for my policy now. That gets me almost the exact same benefits, up to 60% of my income. So that’s pretty — at first, I will say, after I’ve gone through the process, it’s not very shocking. But initially, it was because it’s significantly more than life insurance that I pay for and some of my other insurances. So it’s definitely a lot more expensive than some of the other things out there.
Tim Baker: So I think another for listeners to be aware of is a lot of your employers will provide disability insurance. And typically, short-term disability insurance is you know, it’s kind of icing on the cake. Typically, we don’t advise clients to go out and buy a short-term disability policy. We’ll basically say, you know, to make sure you have a good emergency fund. From a long-term disability policy, if you do have long-term disability through your employer, know that the benefit is probably not going to be enough to kind of cover your needs. You know, also understand that it probably makes sense to buy a supplemental policy to your employer policy, so a supplemental insurance policy that’ll be maybe a reduced benefit or basically to give you some additional coverage in case you do leave your job or you want to have that future purchase option in there. But again, the reason that you get a supplemental policy is the benefit might be too small, the benefit period may be too short, or it’s not the right definition — so like any occupation versus own occupation, and you want to make sure you have own occupation in place. And again, you could lose your disability insurance if you switch jobs. So if you have the disability insurance in place that has that future options, that supplemental policy that you bought to kind of cover down on some of those shortages would then become your primary insurance policy, disability policy. So it makes sense to have that in place. So Tim Church, I think we explored disability fairly in-depth. I’m glad we were able to go through the PolicyGenius quote process to kind of give an idea of what that looks like for you. So thank for coming on the podcast, and hopefully our listeners get something out of this and at least get the wheels turning in terms of what they need from, you know, their ability to protect their income.
Tim Church: Definitely. Thanks, Tim. I think it’s so important and just, like I said, like we’ve been talking about, that you worked so hard to get to where you are and also you’ve got to think about yourself and your family and who’s dependent on that income just like life insurance. So at the end of the day, it can really make you feel pretty good to have that protection in place.
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