Friday, May 06, 2016

DIAM '16: Real Life

I've always discounted the 'value' of group (aka employer provided) life and disability insurance. Typically, these are designed not to be there when you need it. No, I don't mean that they won't pay off on a claim, but rather that they're typically not actually in force at claim time (eg new job, unemployed or retired, etc). The challenge has always been that this is a judgement call; that is, I had no way to objectively quantify it.

Until now, that is, and at least for the disability portion:

I've been working on a case for a well-compensated local exec, whose paycheck renders her eligible for up to $12,500 a month benefit. She already owns a $5,000 per month policy on her own, and her employer-paid group disability plan provides an additional $7,500 to that.

Those playing along at home will notice that this seems to indicate that my client can't buy any more on her own: $12,500 less the $5,000 private plan and the $7,500 group cover equals zero.

But a funny thing happened:

It turns out that the two carriers I contacted about this case both offered an additional $4,000 a month benefit. Which tells me that they've discounted the group plan by almost 50%. So at least in this instance, I can put a quantifiable value on that group coverage.

Interesting, no?
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