My company pays for disability insurance for me. They changed companies and now the old company is asking if I want to continue coverage. Can I have two policies? My company paid policy covers just short of 70%
Can I Have Two Disability Insurance Policies?
Add Your Answer To This Question
You must be logged in to add your answer.
.JPG){kind=avatar}
Multiple disability policies often occur when an employee receives a disability policy from his or her employer but wants to supplement the amount of income reimbursement, in the event of an income loss due to a disability. Often, but not always, payment from one policy will be off-set by the amount of payment from an additional disability policy, so that the policyholder does not receive more than the actual amount of income loss.
Read each policy carefully, particularly as each addresses payment provisions.
A situation where you could maximize your coverage is purchasing individual coverage prior to joining a group plan. There is no offset in place then and there is a potential to cover 100% of your income. Individual first, group second. That's the only way that works.
The long term policy may have an extended elimination period of 90 days or 180 days before benefits commence. A short term disability plan can commence within in days and pay benefits up to the elimination period of the long term plan. What you are describing sounds like two long term disability plan and would not make financial sense to keep the other policy.
If this was outside of work, could you have 2 policies? Sure can. & I don’t mean short term plus ling term. Although my buddy Tim gave some sound advice about that... There are many times that a person should keep the DI plan they currently own while considering a new plan. I won't list out all those reasons. They're very situation specific.
IF... if you were thinking, "I'll have more protection if I own two plans", I would suggest researching a Critical Illness (CI) plan for its additional benefits. It’s not an income/occupation based protection plan. There are no waiting periods, the money doesn't trickle in month to month, and you receive upon diagnosis a lump sum benefit. Some carriers have plan from $5,000 to $500,000. We often pair a Critical Illness with a Long Term DI plan to meet immediate cash needs & long term income replacement. Just a thought... reach out through the site (respecting their rules about posting links to take you off the site) if anyone reading this wishes to learn more. THANK YOU!!
-gravy
You certainly can have more than one disability insurance policy. Most commonly this occurs when a person has a group long term disability coverage plan and it does not fully meet or cover their income needs if they were to become disabled.
In those cases individuals want to protect themselves and their family against a catastrophic loss of income in the case of disability. So, they will often supplement a group plan with one or more individual disability policies to more fully protect their income.
Let me give you an example. A physician earning $200,000 per year has group coverage at work that pays 60% in the case of disability, but has a month cap of $8000. So his group coverage only pays $96,000 per year rather that the full $120,000 if there was no cap. Private Disability Insurance can supplement that amount. Always compare quotes from multiple companies to get the best coverage. Good luck!
To keep things simple I would suggest considering the following. Consider a short term policy that would cover your expenses for 3 to 6 months. A long term disability policy typically is set up to start after 6 months. Some major companies cover this benefit in the U.S.A, but typically at a 50% benefit of your base. At open enrollment, you might have the option to buy up to 60% or 65%.
If you are a good savor, plan to save 3 to six months of your income and then the short term disability could be optional.
Long term disability benefit options vary from 2 years to retirement age.
So as you can read, their could be multiple options for disability insurance specific to someone's needs. You should work with someone who can help you determine your options, be it through your employer or indendently.