Disability Insurance Question - experts needed

[pluto]

I previously took out a Long Term Disability Insurance (LTDI) policy individually since I wasn't covered by my employer.

My employer is just now in the process of implementing a group insurance plan including LTDI. Their coverage will be the same as my individual policy (66% of pre-disability income till age 65). The policy is being completely covered by my employer at no cost to me.

I was thinking about cancelling my individual policy since I'm paying quite a bit for it and it now seems unnecessary. I was already shopping around for a new policy since I was unhappy with the rate on the original when I found out I would be covered by the company.

However, the agent at the company my policy is with told me that because I had taken out the policy before I was covered by group benefits, if I ever made a disability claim I would be able to collect on both policies, in effect exceeding the 66% of pre-disability income.

The agent at another company I was talking to about a new policy told me that I wouldn't be able to collect more than 66%, it didn't matter when the policy was taken out, meaning any individual coverage is useless other than if I were to leave the company and go to work for myself or somewhere with no group plan.

So, if there are any insurance experts here who can offer some non-biased advice here I would greatly appreciate it, thanks!

[asdfvcx]

I have doubts you'll be able to collect from both. I expect at least one policy is going to disallow it. But, I'm not an expert here and that's not the main reason I replied.

My employer is just now in the process of implementing a group insurance plan including LTDI. Their coverage will be the same as my individual policy (66% of pre-disability income till age 65). The policy is being completely covered by my employer at no cost to me.
Are you sure the employer is covering the costs? If LTD is picked up by the employer, then all of the benefits are taxable. If the employee pays, then the benefits are tax free.

My understanding is that it's normal at most places for the employer to negotiate the group rate, but the employee will pay the actual cost.

If your employer really is picking it up, you need to consider that the benefit is going to be taxable when making your decision.

[lasallejai]

I previously took out a Long Term Disability Insurance (LTDI) policy individually since I wasn't covered by my employer.

My employer is just now in the process of implementing a group insurance plan including LTDI. Their coverage will be the same as my individual policy (66% of pre-disability income till age 65). The policy is being completely covered by my employer at no cost to me.

I was thinking about cancelling my individual policy since I'm paying quite a bit for it and it now seems unnecessary. I was already shopping around for a new policy since I was unhappy with the rate on the original when I found out I would be covered by the company.

However, the agent at the company my policy is with told me that because I had taken out the policy before I was covered by group benefits, if I ever made a disability claim I would be able to collect on both policies, in effect exceeding the 66% of pre-disability income.

The agent at another company I was talking to about a new policy told me that I wouldn't be able to collect more than 66%, it didn't matter when the policy was taken out, meaning any individual coverage is useless other than if I were to leave the company and go to work for myself or somewhere with no group plan.

So, if there are any insurance experts here who can offer some non-biased advice here I would greatly appreciate it, thanks!


No, you will not receive 2 X 66.6% from both insurers upon a disability. If two policies are present you will still be only entitled to the maximum non-taxable amount allowed. The first insurer will pay first, and if the insurance proceeds does not reach the maximum amount allowed, then you can claim the balance from the second insurer. I am sure your employer will increase your salary for the amount you will have to pay for the LTD premium at work and it has to be paid by youself, because otherwise the benefit will be taxable when received, and for taxable benefit you can be insured up to 100% of your gross income if your employer is going to pay the premium for you. Please be careful when comparing a group LTD plan to a privately owned DI policy, because they are not the same, especially when it comes to defintions of disability, own occupation, residual benefits and partial disability and possible recurring disability, not to mention that the group premium rates are not guaranteed and the insurer has the rights to cancel the coverage any time they desire, whereas, your privately own policy can only be amended and cancelled by YOU!

[dlander]

Policies have a section called "co-ordination of benefits" to determine exactly what is paid by whom when there are multiple policies in place. It is very very very unlikely that both of you policies have "co-ordination of benefits" clauses that allow you to collect 2 * 66%.

[John_In_Vancouver]

I previously took out a Long Term Disability Insurance (LTDI) policy individually since I wasn't covered by my employer.

My employer is just now in the process of implementing a group insurance plan including LTDI. Their coverage will be the same as my individual policy (66% of pre-disability income till age 65). The policy is being completely covered by my employer at no cost to me.

I was thinking about cancelling my individual policy since I'm paying quite a bit for it and it now seems unnecessary. I was already shopping around for a new policy since I was unhappy with the rate on the original when I found out I would be covered by the company.

However, the agent at the company my policy is with told me that because I had taken out the policy before I was covered by group benefits, if I ever made a disability claim I would be able to collect on both policies, in effect exceeding the 66% of pre-disability income.

The agent at another company I was talking to about a new policy told me that I wouldn't be able to collect more than 66%, it didn't matter when the policy was taken out, meaning any individual coverage is useless other than if I were to leave the company and go to work for myself or somewhere with no group plan.

So, if there are any insurance experts here who can offer some non-biased advice here I would greatly appreciate it, thanks!

The first agent was right.

The second agent is right only if you bought the individual plan after being on the group disability plan.

[pluto]

Please be careful when comparing a group LTD plan to a privately owned DI policy, because they are not the same, especially when it comes to defintions of disability, own occupation, residual benefits and partial disability and possible recurring disability, not to mention that the group premium rates are not guaranteed and the insurer has the rights to cancel the coverage any time they desire, whereas, your privately own policy can only be amended and cancelled by YOU!

This is something worth considering.... I have extended own occupation and cost of living payout increase on my individual policy which I presume the group one does not (have not received the full details yet). However it is hard to justify paying for a whole extra policy just for these things.

That brings up another question, with individual DI policies the rate you take out the policy is the rate for life usually, right? I'm pretty young so I guess that rate is only going to go up with time.


John_In_Vancouver, it seems you are conflicting with what everyone else said in this thread or am I mistaken?


I think the agent confused me when he said my individual policy would pay as well as the group, I think what he meant is the individual policy will pay *first* but there still has to be a maximum. He doesn't think it would be as long as 65% but we won't know till I get the details on the new group policy.

[lasallejai]

This is something worth considering.... I have extended own occupation and cost of living payout increase on my individual policy which I presume the group one does not (have not received the full details yet). However it is hard to justify paying for a whole extra policy just for these things.

That brings up another question, with individual DI policies the rate you take out the policy is the rate for life usually, right? I'm pretty young so I guess that rate is only going to go up with time.


John_In_Vancouver, it seems you are conflicting with what everyone else said in this thread or am I mistaken?


I think the agent confused me when he said my individual policy would pay as well as the group, I think what he meant is the individual policy will pay *first* but there still has to be a maximum. He doesn't think it would be as long as 65% but we won't know till I get the details on the new group policy.


Some companies allow their employees to opt out of the group one if personal owned policy is already in force to the maximum coverage. Ask your human resources personel and they should be able to tell you. I opted out from my group one since I had already had one in place before the company offered. Moreover, some clients prefer to keep the priavtely owned one and ask for a discount from the insurer when they can show they also get coverage at work. Try that too if you do decide to keep your privately owned one in force. Group DI is toally different from individually owned, and please be careful when deciding, because if you have your own policy in force already with income loss definition of disability, own occupation rider, future needs rider, and inflation indexing rider, then do think twice before cancelling it.

Yes, once the privately owned policy is issued no matter what happens to you the insurer cannot amend the premium. However they can actually reduce the premium if your occupational classification is improved. Insurers allow upgrading of occupational classes based on occupation stability, income, length of time policy has been in force, etc. I was able to upgrade my classification from a 3 to a 4 myself; therefore, a rate reduction occurred.

[John_In_Vancouver]

John_In_Vancouver, it seems you are conflicting with what everyone else said in this thread or am I mistaken?

My post is based on what I have been told by numerous disability insurance experts from Great-West Life. This holds true with guaranteed, non-cancellable disability plans.

Your best bet is to call your insurance company to confirm.