So I got a financial planner now but one question......
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So I got a financial planner now but one question...... One Man Rodeo 10-06-2006
Posted by One Man Rodeo on October 6, 2006, 7:08 pm
Future here I come.

One question I want to ask here is disability and critical illness
insurance.

He wanted to sell me a "get hurt and miss work" package. I have no debt and
no mortgage and I'm single no kids so nobody depends on me and I have little
expenses outside of food and clothing and car etc etc.

How does an insurance policy like this fit into a long term investment plan?
I declined it to start because I want to focus on savings and wealth
building to start but maybe next year I will revisit.

The insurance plan we discussed includes 75% of my income compensated if I
get sick or get hurt and miss work plus lump sum payments for a loss of limb
etc plus monthly payments go up 3% every year until I am 65 (I'm 30 right
now). It covers a whole host of critical illness stuff like cancer and
heart attacks and the normal disabling type naturla diseases. Even if I go
to work and do not make my former income but a lower one, the plan will top
me up to the monthly income I was before I was sick.

Payments start 90 days after diagnoses. There are some other riders too.
I can maybe discuss a plan that only gives me 50% of my income too and
eliminate some other riders.

How important to an overall long term financial and investment plan is this
form of insurance?


Posted by John A. Weeks III on October 6, 2006, 7:51 pm

> How does an insurance policy like this fit into a long term investment plan?
> I declined it to start because I want to focus on savings and wealth
> building to start but maybe next year I will revisit.

A lot of folks buy life insurance, but few actually die before
their time. But few seem to buy disability insurance, yet your
chances of being disabled 3 months or longer during your work career
is something like 1 in 3. While your income will likely stop, your
bills will still be there (you have to live and eat), plus you may
have all kinds of new expenses for medical equipment, supplies,
drugs, and treatments.

If you have an income stream that you depend on, you should insure
it. Either take out formal insurance, or have enough money invested
so you can live off of the income.

-john-

--
======================================================================
John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================


Posted by One Man Rodeo on October 7, 2006, 6:24 am

>
> A lot of folks buy life insurance, but few actually die before
> their time. But few seem to buy disability insurance, yet your
> chances of being disabled 3 months or longer during your work career
> is something like 1 in 3. While your income will likely stop, your
> bills will still be there (you have to live and eat), plus you may
> have all kinds of new expenses for medical equipment, supplies,
> drugs, and treatments.
>
> If you have an income stream that you depend on, you should insure
> it. Either take out formal insurance, or have enough money invested
> so you can live off of the income.

It's expensive insurance. For 75% of my monthly income ($2150) which is
what the insurance company will pay out for such disabilities and illnesses
the monthly premium is 131.00 per month. I pay for these things yearly so
it's over $1000 a year. Plus in Canada we have sales taxes on top of the
insurance premiums and I think provincial tax may be added too but I'm not
sure but the tax will either be 6% or 14% in my place of residence. That's
sounds like alot of money. That'll be more than my car insurance. I'm a
blue collar worker and will be for some time. My salary is my primary
source of income. It'll be a long long time before I could live off of
investments. Will these premiums at my income level hurt my financial
health prospects or help it. I can't decide on this one.....


Posted by rick++ on October 10, 2006, 10:12 am

> It's expensive insurance. For 75% of my monthly income ($2150) which is
> what the insurance company will pay out for such disabilities and illnesses
> the monthly premium is 131.00 per month.

Shop around. A co-worker looked to this and found cheaper external
plans
than what the company offered.
The silly duck commercial is one of these insurance companies. But I
have
not idea as to their costs or quality of service.

It also maters in the US where the premiums are paid with pre-tax and
after tax
money. Then the disbrusements are taxed or not taxed, opposite the
sense
of the premiums.


Posted by Ram Samudrala on October 7, 2006, 6:24 am
It depends on how much it costs. One thing you don't mention is if
there is an income cap to which your 75% applies (if you make a
million dollars a year, will they compensate $750K -- most will have a
cap) and if that cap makes sense. My cap was okay before and it's not
that great now but it's better than nothing and I pay only
$6/month.

I personally think such insurance is a good idea
(http://www.ram.org/ramblings/philosophy/financial_plan.html ) unless
you have some other source that can guarantee to take care of you
(like rich parents who will not go back on their word). And even then
I prefer to take care of myself first if possible.

--Ram


> Future here I come.

> One question I want to ask here is disability and critical illness
> insurance.

> He wanted to sell me a "get hurt and miss work" package. I have no debt and
> no mortgage and I'm single no kids so nobody depends on me and I have little
> expenses outside of food and clothing and car etc etc.

> How does an insurance policy like this fit into a long term investment plan?
> I declined it to start because I want to focus on savings and wealth
> building to start but maybe next year I will revisit.

> The insurance plan we discussed includes 75% of my income compensated if I
> get sick or get hurt and miss work plus lump sum payments for a loss of limb
> etc plus monthly payments go up 3% every year until I am 65 (I'm 30 right
> now). It covers a whole host of critical illness stuff like cancer and
> heart attacks and the normal disabling type naturla diseases. Even if I go
> to work and do not make my former income but a lower one, the plan will top
> me up to the monthly income I was before I was sick.

> Payments start 90 days after diagnoses. There are some other riders too.
> I can maybe discuss a plan that only gives me 50% of my income too and
> eliminate some other riders.

> How important to an overall long term financial and investment plan is this
> form of insurance?


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