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Disability and life insurance cost

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  • Avatar Decapolis 
    Participant
    Status: Physician
    Posts: 75
    Joined: 11/04/2016

    So I’m getting DI and life insurance through a reputable agent and company but my spouse is absolutely blown away by the monthly cost and thinks we are spending too much of our monthly income on insurance. Im not looking for anyone to review my policy but more for reassurance that what I’m paying is the norm. I will be paying $730/month for 15k in DI and 4 million in life insurance. I’m 40 and really healthy so no red flags.

    Seem reasonable?

    #53577 Reply
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 6066
    Joined: 01/12/2016

    Its expensive but worth it. Doesnt sound crazy, I think mine is 15k/month for 5-600 and another 130 or so for 3 million life. Sounds similar.

    #53578 Reply
    Avatar Decapolis 
    Participant
    Status: Physician
    Posts: 75
    Joined: 11/04/2016

    Thanks zaphod. That makes me feel better.

    #53580 Reply
    PhysicianOnFIRE PhysicianOnFIRE 
    Moderator
    Status: Physician
    Posts: 1536
    Joined: 01/08/2016
    Splash Refinancing Bonus

    When I carried them, I spent around $300 a month for lesser coverage ($10,000 a month DI, $1 Million 10-year term life) starting at age 30.

    I think your numbers sound reasonable — one more reason to go for early FI. That’s $9,000 a year that could be going towards kids’ college funds. Or a really swell vacation.

    40-something anesthesiologist and personal finance blogger @ https://physicianonfire.com [Part of the WCI Network] Find me on Twitter: @physicianonfire

    FIRE. Financial Independence. Retire Early.

    #53583 Reply
    Miss Bonnie MD Miss Bonnie MD 
    Participant
    Status: Physician
    Posts: 497
    Joined: 02/14/2017

    Numbers sound reasonable. Might seem “high” because it would’ve been cheaper if you were younger & healthier.

     

    Do you really need 4M in life insurance though – and is this for one long term? You can lower the price by laddering within a policy (decreasing amount as time goes on). For example, I have 2 polices: 1 mill x 20 years, 1 mill x 15 years, so will have 2 mill for the first 15, then drops to a mill the last 5 years.

     

    FWIW, I have about just under half your DI amount, and half of LI and pay just under half the premium you are. I bought my policies at age 38 & 39.

    "Being rich is having money; being wealthy is having time."

    Miss Bonnie MD --> Wealthy Mom MD @ http://wealthymommd.com

    #53590 Reply
    Avatar Decapolis 
    Participant
    Status: Physician
    Posts: 75
    Joined: 11/04/2016

    My life insurance is laddered so it’s not 4 million for the whole term length. I chose 4 million bc I have 4 young kids and a stay at home spouse and I’m early in my career but maybe I don’t need that much?

    #53591 Reply
    DK Unger DK Unger 
    Participant
    Status: Website Sponsor, Insurance Agent, Small Business Owner
    Posts: 111
    Joined: 01/08/2016

    If you are open to unconventional suggestions, there are ways to reduce the DI premium. Especially if you are not going to own the policy for more than 10-15 years, explore Guaranteed Renewable only plans with carriers like Ameritas or Standard. The premium savings is 15-20% and historically guaranteed renewable rate increases are rare. Compare the savings and take into account interest on the savings. Then do the math to see how much the rate would have to increase to offset the savings+interest. Also compare premiums for “modified” own occupation plans with “true” own occupation plans. Ask yourself if you would choose to work if you became disabled from your specialty. Hopefully this helps anyone reading this realize that they can make their DI premiums more affordable without sacrificing the essentials of the coverage they desire.

    Independent Insurance Agent - dku(at)di4mds.com

    #53598 Reply
    Craigy Craigy 
    Participant
    Status: Spouse
    Posts: 2020
    Joined: 09/16/2016

    That does seem expensive.  Personally I wouldn’t want to spend that much.

    However if your spouse isn’t bringing substantial money to the table, insuring your future isn’t the worst thing to blow money on.

    LEVEL 1 WCI FORUM MEMBER.

    #54029 Reply
    Jason Veirs Jason Veirs 
    Participant
    Status: Insurance Agent, Small Business Owner
    Posts: 76
    Joined: 05/17/2017

    It’s really hard to say as to whether the pricing for the DI is competitive, as there are many variables when it comes to pricing DI, but insuring your income in a situation such as yours is imperative.

    With regard to the Term life insurance, it’s much more straightforward. As you probably already know, you can easily go to http://www.Term4Sale.com in order to verify all of the pricing and keep the broker honest. Just make sure that you’re working with a reputable independent broker, who not only represents multiple carriers, but who is also familiar with each carrier’s specific underwriting guidelines, as it can really cost you if they have limited carrier offerings, or if they’re not well-versed with underwriting.

    Hope this helps.

    Jason P. Veirs - Life | Disability | Health | Long-Term Care Insurance Broker located in San Diego, CA | Owner of Insurance Experts Solutions, Inc.
    Office Direct: (619) 334-2400 | [email protected] | http://www.InsuranceExperts.com

    #54043 Reply
    Scott at MD Financial Services Scott at MD Financial Services 
    Participant
    Status: Website Sponsor, Insurance Agent, Small Business Owner
    Posts: 429
    Joined: 01/14/2016

    I think it really depends on so many factors but we designed a contract for a client just yesterday who had $15k of monthly benefit for $370 at age 38….that would leave $360 left over for your term insurance based on your message above.  It all comes down to your medical specialty, age, gender, state you live in and the benefit design you want.

    Let me know if we can help further.

    S. Scott Nelson-Archer, CLU, ChFC with M. D. Financial Services, Inc.
    Direct Phone 713-966-3932, Email [email protected]

    #54053 Reply
    Avatar mamaham 
    Participant
    Status: Spouse
    Posts: 77
    Joined: 12/08/2016
    my spouse is absolutely blown away by the monthly cost and thinks we are spending too much of our monthly income on insurance.

    Click to expand…

    this is not the answer you were directly asking but from the perspective of a frugal stay-at-home mom who has been “converted” to seeing the benefits of these costly insurance policies…

    i would suggest that you have in depth discussions (or just point your spouse to the posts by WCI that do it for you – which is how I started thinking about it) about what would really happen if something were to happen to you, the sole-income earner.  once you start running through these scenarios, it can become more apparent why insurance (even costly) is needed.  many people don’t want to face these possibilities and so bury their heads in the sand or just look at the premiums, but for me it has actually brought more peace since we are a one income family.

    does your spouse have a past career that is easy to re-enter into if something happens?  then maybe you can carry less insurance, mainly disability (and therefore less expensive)…  for me, it would take some time (maybe a couple of years even) to get back into my field and it would definitely not be anywhere near our current income level.

    there was a post recently speaking about specific instances where people had and did not have adequate disability coverage…  i cannot find it now. i will see if i can find it and post.  this particular post made me really start looking at our disability insurance (exclusions etc) and we are having it reviewed right now to see if we are adequately covered – or at least to know what is excluded before hand…

    someone recently posted this link to a podcast but i have not listened to it yet…  the speaker was injured and found out that the disability insurance was not adequate…

    https://hippocratichustle.com/2017/07/10/stephanie-pearson-md-disability-insurance/

     

     

     

    #54095 Reply
    q-school q-school 
    Participant
    Status: Physician
    Posts: 2592
    Joined: 05/07/2017

    Most of physicians I talked to had arrived at around 3-4 million for young physician with couple kids as the right number for life insurance. I thought it was crazy high at first but ended up with same.

    Depends on what lifestyle you want your family to have if something were to happen. My wife is physician also, so I thought we would need less but the marginal cost was so low I decided to just do it so she could stop working if desired. Of course as always college fees for kiddos and health care remain X factors.

    We pay ballpark same. But we have multiple insurances through private and work. As a side note wife has small life insurance policy also for just in case. If anything happens to her I’m going to be in big trouble. She really runs the household. I’m going to need lot of help. 🙂

    #54120 Reply

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