Comparing Disability Insurance Policies
This is the hardest post to write of all the ones I have done on disability insurance because I’m not a disability insurance agent. Because every policy is different, you are eternally comparing apples to oranges. Even the policies of the same company differ from year to year. The best thing to do is to get a copy of the current policy from every company you are considering, and look at them side by side, comparing the features you feel are most important.
I get a lot of questions about group insurance policies. I saw a post recently on the Bogleheads forum from David Goldenzweig (an insurance agent who sells a lot of Guardian disability insurance policies to physicians) with a helpful chart. It’s clearly a sales plug for Guardian, but demonstrates quite clearly the difference between a solid individual disability policy (of which Guardian is one of several good companies) and the typical group policy. Sorry about the small print (use control + to blow up the webpage in your browser).
I like this chart because it demonstrates just how many different features there are in disability policies. These suckers are COMPLICATED. And you get what you pay for. If the policy you’re looking at costs less than ~ 2.5-5% of the income you’re protecting, there’s a reason. That doesn’t mean you need the most expensive policy out there, but you ought to compare the one you’re buying to the best possible one you can get and consciously decide which features you’re going to jettison to save a few bucks. If your agent can’t sell you policies from multiple companies, you’re buying it from the wrong guy and you won’t be getting the best possible advice.
This guest post discusses the pros and cons of one company over another.