Seeking Advice on LTD Insurance Coverage

[minoly]

I want to buy additional LTD coverage outside of what I currently have through work. An agent at Northwestern Mutual provides me with an annual quote of $150. Is this a good price? When it comes to insurance coverage, I don't want to sacrifice quality for price so I need to pay the cheapest rate as long as it is with a company that are reputable and will stand behind their policy coverage.

I'm new to this so please advise. Is Northwestern Mutual a good company to go with and is the price fair?

 

[LGilmore]

annual quote of $150? Are you buying $10 a month?

Here is the absolute best advice for DI. READ the definitions! The definitions ARE EVERYTHING! the shorter the sentence, the better for the insured. The longer the sentences the more reasons an insurance carrier can say no.

NWM is an excellent company. Put up a policy summary and maybe you'll get better answers. Right now as posted, no one can really tell you anything other than you've probably screwed up your message.

 

[VolAgent]

One thing with DI is, its full of trade-offs. Try to help us understand what you really want so we can give you better advice.

Do you want a policy that can never have a rate increase? You can get it, but you'll pay more for it.

Do you want a definition of disability that is easier to meet than others? Again, you can do it, but you'll pay for it.

Do you want to be able to increase coverage at a later date, just by showing the required income, without having to re-examine your health? You get the idea.

Also, what is your occupation? Occupation class is huge in determining premium, and some companies have better products/pricing for certain occupations versus other companies.

 

[minoly]

I'm in HR. Yes, I'm looking for LTD coverage with a straight forward definition of disability not one with a bunch of attached criteria. I do want to have an option to increase coverage as my income increases so yes it would be nice to have one that doesn't require me to jump through hoops at that time. Also, I don't want to go with a company that promises everything but later fail to honor their policy coverage.

I received an outline of coverage from NWM and the definition of Total Disability is: "You are totally disabled when both unable to perform the principal duties of the regular occupation, and not gainfully employed in any occupation."

Partial Disability: You will be considered partially disabled and may qualify for a Proportionate Benefit if you are unable to perform one or more of the principal duties of your regular occupation, OR spend as much time at your regular occupation as before the disability started, and

• You have at least a 20% Loss of Earned Income caused by the disability, and
• You are gainfully employed.

Proportionate Benefit: The Proportionate Benefit compensates you for a loss of earned income caused by partial disability.

• The benefit paid is proportionate to the Loss of Earned Income
• If you have at least 80% Loss of Earned Income, you will receive 100% of the Full Benefit.

You don't have to demonstrate a Loss of Earned Income during the first six months that benefits are payable if you have at least 20% loss of time or abilities. During that time, you can choose to receive

• 50% of the Full Benefit, OR
• A benefit based on your actual Loss of Earned Income.

If I interpret the above terms correctly, I will only receive Full Benefit when I can't gain employment doing something else outside of my current occupation.

Any advise on whether this is a good enough policy to go with? Is it pretty much standard or can I get something else better with a different company?

 

[somarco]

Now look at the plan through work. Good chance it has more holes than Swiss cheese.

In most cases, group LTD is better than nothing, but not by much. Plus, if your employer pays any portion of the premium that translates into a pro-rated taxable benefit to you.

 

[VolAgent]

If I interpret the above terms correctly, I will only receive Full Benefit when I can't gain employment doing something else outside of my current occupation.

That is correct. Ask yourself, is there a way in which you could be disabled and unable to continue in HR, but there is a job you might take that paid less?

You can step up to an option which basically removes the "and not gainfully employed." section from the definition of disability. Again, it costs more. Generally specialized physicians get it. Sure, maybe the guy can't do surgery anymore, but he can teach or practice family med. Some call it "true own occ". There is also a lower definition, "any occ", which basically says if you have the knowledge, training and experience to do the job and are physically capable of doing it, no check.

Guardian's is default "true own occ", and you can buy a rider to add it to NWM's, Mass Mutual's and The Standard's, as well as some other companies.

Also, the base contract from NWM is sold on a guaranteed renewable basis. That means as long as you pay the premium, they cannot take away your policy. Also, they can only raise your rate if they do it for everyone in the same occupation class across the state. A step up is non-cancellable. That means that as long as you pay the premium, they can not take the policy away, nor can they raise your premium. Again, non-cancellable costs more. However, DI companies aren't like health insurance, premium increases are rare. NWM and The Standard are guaranteed renewable by default. You can add a rider to make them non-cancellable. Guardian and Mass Mutual are non-cancellable.

There is nothing wrong with NWM, although a lot of non-NWM agents don't like the company or their agents. Only NWM agents are allowed to sell their products, and they generally think they are the greatest out there. It is a good company, but there is no greatest.

 

[dgoldenz]

I'm still lost as to how they came up with $150, unless that's the monthly premium and you're reading it wrong....also, Guardian has the best disability contract.

 

[Full Throttle]

Personally, I don't see the value in non-can for the extra premium paid. JMO.

 

[LGilmore]

"You are totally disabled when both unable to perform the principal duties of the regular occupation, and not gainfully employed in any occupation."

You can find better definitions. after that comma, it's BS and makes the policy a narrow fit to collect.

I would not purchase just for those words after the comma. That's basically social security's definition.
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"I don't see the value in non-can for the extra premium paid. JM"

so you don't care if the company cancels out from under you ten years after purchase?

 

[somarco]

"I don't see the value in non-can for the extra premium paid. JM"

so you don't care if the company cancels out from under you ten years after purchase?

Perhaps something has changed in the years since I studied insurance contracts in college and even sold DI, but non-can policies meant your premium could never increase . . . even if the liability is purchased by a successor carrier.

Guaranteed renewable policies were just that, guaranteed to renew. However the rate could be adjusted on a block basis.

Technically, both policy forms are guaranteed renewable, the difference being what happens to your rate.

Group LTD plans are neither guaranteed renewable or non-cancellable.