Comment by 300bps | Hacker News Reader

Comment by 300bps | Hacker News Reader

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Group disability insurance is very often worthless and not worth even the paltry sum an employer pays for it.

Disability insurance is all about the definition of disability. Only a few people have a truly comprehensive disability policy through their employer. This is because the definition of disability for group policies usually requires that, when making a disability claim, you cannot work in your job "or any other job" (or something to that effect). As as a result, you usually must be completely and totally disabled on a permanent basis to collect long term disability from your employer.

http://www.bogleheads.org/wiki/Disability_insurance

Often, they don't kick in for 6 months and then because you're still able to sell pencils for 50 cents on the street corner they will not cover you.

The reason why individual policies are typically much more expensive is because their definition of disability is different. Many individual policies are "true own occupation" which means that if you're now a neurosurgeon they can't force you to work at a McDonald's drive through.

My LTD is 60% of my income, tax free (very important, always pay for any disability post-tax, if you don't your income from it is taxable), until I am able to make over 80% of my pre disability income.

It provides me benefits from 6 months after my disability (I decided not to pay for short term which starts at 2 weeks until 6), and will keep going until I am ~65 years old.

Is it an "own occupation" policy? If not you have to be a vegetable before you can collect the 60% you signed up for.

Just double checked. It's own occupation for 24 months, then it becomes reasonable occupation. I have a feeling that that term is something that when 24 months approach, you want a good lawyer for.

Still, considering I'm paying less than a coffee per month for LTD, and personally knowing someone who was once working as a top tier developer and got into a serious biking accident that left him with brain injuries, I'm going to buy into it. Next year I'm going to push HR about that 24 month clause.

>>It's own occupation for 24 months, then it becomes reasonable occupation.

Reasonable occupation is pretty vague and I think this kind of word-play is what helps insurance companies find reasons or even solid justifications to not pay up in the end.

As your parent comment implied, the insurance company can just argue selling lemonade or pencils is a 'reasonable occupation' and can even prove there are people surviving daily on such a business. And all that can become a base reason to just not pay up.

Does anyone sell "insurer not paying" insurance to cover lawyer fees?

This is actually what I thought OP was posting about when I was waiting for the page to load.

... and "insurer of insurance not paying" insurance.

It's insured turtles all the way down.

Yes. Read every clause of any insurance contract, and realise that the other party will fight to the word level to defend their default position of not paying out. Those clauses are very well thought out, and not by the buyer.

In my own circumstances I've found many insurance contracts to be worthless in practice.

That's what I came to the comments section to check out - it seemed like a diamonds to doughnuts bet that unless the insurance provider has an exceedingly good reputation, one should assume that the secret to their policy is that they never really pay out.

I don't have it in front of me, but I recall the fine print on my policy stating that if they cover you, they will only bring your income up to 60% of your salary. If you are receiving other benefits, like social security disability, they subtract that from the payout.

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