Does everyone here have a plan for the worst case?

[yellow heel]

Another thread that I was inspired me with this question.

I know we are always supposed to plan for the worst. Save at least 6 months of EF just in case anything happens to your job or short term health.

But what if something really goes bad and you are permanently disabled? Does anyone actually plan for that? This is in some sense worse than passing away. We can all get term life for that but does everything have a disability? I have actually checked but I hear it is very expensive and you can't get cheap here or it won't cover most of the situation that you may get into...

I believe if have a terminal illness, the term life may have a clause for that situation where you can do early cash out (correct me if am wrong).

If anyone has a good plan B, lets hear it.

[disneysteve]

I've had a very good disability income policy for about 20 years since I started my career. It is actually a few individual policies that were taken out as my income grew. I think a couple kick in after 60 days and the others after 90 days. They cover me for life.

[MonkeyMama]

My long-term disability costs about $200 per year. It is offered by my professional association and is a good policy that covers 75% of my gross income (for life). I could live on it quite easily. (My profession does not have a high disability rate, I suppose).

Since short-term disability is a mandatory state program here, I have a 1-year waiting period (which does make it cheaper). Short term disability is very good here (utilized it for 2 pregnancies). Short-term cost about $1k per year, but I have no choice on that, working in California. (I took $30k benefits with 2 normal pregnancies/leaves - so has been worth the cost, to me). Short-term lasts up to a year.

Plan C is we don't rely on my spouse's income, so he could always work if I were to become disabled (is not working at current).

[disneysteve]

Plan C is we don't rely on my spouse's income, so he could always work if I were to become disabled (is not working at current).

Same here. My wife works per diem but could easily go to full time if she wanted/needed to. And currently, 50% of her income goes into her 401k since we don't need the money at this point. If something happened to me, she could switch to full time and reduce the 401k contribution so that she'd bring home a lot more money.

[wrk4lvg]

What are the recommendations on long term disability income? I know my Great grandparents put money into a trust to take care of them, then subsequently my grandparents inherited said trust and set up the same long-term care that was a life saver for my dad (the executor of the trust)when both of his parents were at their worst and costing a lot of money. Had it not been for the long term care that was purchased, I'm not sure how he would have been able to deal with it all. Unfortunately, both grandparents have passed and that trust had to be split up amongst their 3 kids. So what was at one point over 1 million is now 3-500k per kid. The trust was set up to take care of the kids each generation down, but I can't depend on that to ever reach me. My dad is remarrying next year and I suspect the buck will stop w/ the new wife and her two kids if something were to ever happen to my dad, so I need to know how to plan for my inevitable down the road.

(I'm assuming that the planning/purchasing of any thing would have to come last behind debt paid off, EF fully funded, house DP, etc...)

[Joan.of.the.Arch]

Nope, I absolutely do not have a plan for the worst case. As far as disability insurance goes, I looked into it once and was astounded at the expense. When DH was employed full time he picked up the optional disability insurance and it was cheap. Same for me, even when I was PT employed.

I once read that people with even just one daughter live 6 years longer than people with only sons, any amount of sons. And people with a daughter-in-law live some extra years, too, compared to those with only unmarried sons....Evidently, one of the best disability insurances is to have an adult daughter or daughter-in-law. But I bet a lot of those women wish they did not have to do it all, as many of them feel obliged to do.

[My English Castle]

I'm so glad then, that we have a daughter! I have disability insurance, DH does not. But with both of us working, maybe we both don't need it? We could (scrape scrape) live on either of our incomes if we had to.

[wrk4lvg]

I have to ask, what does DH stand for?

[disneysteve]

I have to ask, what does DH stand for?

DH = Dear Husband
DW = Dear Wife
DS, DD = Dear Son, Dear Daughter

You get the idea.

Although occasionally one of the regulars will refer to me as DS in a response in which case it stands for disneysteve.

[jpg7n16]

*DS beat me too it*

DS = DisneySteve

[jpg7n16]

What are the recommendations on long term disability income?

The best case is usually: own occupation, 65% income, to age 65.

They won't give you 100% of your income, cause you'd have no incentive to get healthy.

You want coverage against being disabled from your own occupation, not any occupation. If you were a neurosurgeon and you injure your hand terribly, you can't be a neurosurgeon. But you can greet people at Wal-Mart. That means you are not too disabled to do any occupation. Which is lame.

But if you have a Christopher Reeves type accident, you'd still be covered.

[Robert742]

Good topic!

It is important for everyone to have a plan both in case you are permanently disabled and in case you need long term care as you age.

As you can see from the replies, everyone's situation is not the same. If you are a surgeon or high income earner, you need a top-of-the-line, own occupation individual long-term disability policy, which can be expensive, but it is worth every cent to protect your level of income.

But if you are already a greeter at Walmart, you don't need to pay for an own-occupation policy. Group disability coverage if it is available, or an individual short term disability policy before you qualify for social security disability might meet your needs, or be all you can afford.

If you are a high wage-earning blue collar worker, you may not qualify for an individual disability policy due to your profession.

Being aware of the risk and planning for it puts you ahead of the game. If part of your plan is buying insurance, make sure you do your research and understand what you are buying. A lot of people buy disability income riders on their life insurance, thinking they are covered for their needs if they are disabled, only to find out benefits are paid for only 2 years, and you must be receiving social security disability to qualify before the claim is paid.

Disability insurance and long term car insurance benefits vary per company. Do your own research and speak with insurance agents that specialize in these areas.

[Like2Plan]

I am pretty cautious, so I have a lot of precautions in place.
We have 6-9month EF.
I could take 36 weeks off with paid leave (includes my vacation and sick days acrued over the years). I am eligible to retire in 2.5 weeks. I have a LTC policy which has unlimited time frame for benefits.
DH has short term and long term disability ins and he has enough sick days/vacation days to meet the 90 day wait period for the short term disability ins which is a bridge to the 6 month wait period for the long term disability ins to kick in. He has a LTC policy which would pay for 5 years of benefits.

[wrk4lvg]

I will revisited this thread once I get everything else squared away. However, I do see this addition to my financial future probably the most important. Health on both sides of my family has taken my grandparents very early. (My great grand parents (both sides) lived into their 80s-90s) Grandparents 50s-70s (both sides).

[LivingAlmostLarge]

Got disability on DH and Life on us both and I don't work. Got two job offers last month for decent wage but I want to move, so I said no. So I guess me working is the backup plan.