Two Disability Insurance Policies

[NJS]

I have a question to ask about disability insurance. I have two policies, one is employer I have taken out of my paycheck pre-tax. I also have a private disability insurance policy that I pay for. The reason for the private policy is to offset the taxes I would have to pay on the Employer sponsored DI plan. Assuming I cannot collect more than 60% of my pay I wanted to make sure I can collect the full 60% after taxes. I am assuming that this is done by others as well or am I throwing money out the window because I can't have two policies. My apologies as I am not very astute in with insurance.

 

[BNTRS]

I have a question to ask about disability insurance. I have two policies, one is employer I have taken out of my paycheck pre-tax. I also have a private disability insurance policy that I pay for. The reason for the private policy is to offset the taxes I would have to pay on the Employer sponsored DI plan. Assuming I cannot collect more than 60% of my pay I wanted to make sure I can collect the full 60% after taxes. I am assuming that this is done by others as well or am I throwing money out the window because I can't have two policies. My apologies as I am not very astute in with insurance.

For the most part the answer is most likely no you are not throwing money away.

Since financial underwriting was done up front, there would be no reason for the individual policy not to pay.

60% is only a guideline when it comes to maximum coverage one can have (usually the number is 66% and that is based on a non taxable benefit, i.e. taxable benefits are discounted allowing for more coverage).

The group plan doesn't care what other coverage you have. It assumes the risk of whatever percentage is defined in the plan document up to the stated maximum monthly benefit.

Again, financial underwriting would have been completed at application so even if your income has changed, the individual policy would not pay more or less if you were on claim.

It would be wise to have someone review this (perhaps the agent who originally wrote the individual disability policy?) just because having all the facts is better than what I'm working off here.

 

[LGilmore]

Usually if you purchase individual before group, you can actually insure more than 100% of your income. We did my son's before he started residency so he has 110% of his income covered to age 65 with cola. Neither policy has any offset provision to prevent this.

Now had the group been in place first, then the individual carrier would have limited the amount they would do to roughly 70% of total compensation.

Who are the carriers and simply read your contract to see what they will do.

the kid's with guardian because they do have a good solid contract.