If you first purchased your disability insurance policy when you were early in your career, chances are you loaded it up with most of the available riders: own occupation, cost of living riders, residual (partial disability), increase options and CAT catastrophic riders. Since you were early in your career and a potentially long period of time when you could become disabled, you probably also opted for a longer benefit period such as to age 65 or lifetime.
When you get to your 50’s, it may be a good time to reassess your overall picture and make sure your disability policy is still meeting your needs. It also may be a good time to consider making changes on your policy. It also may be a good time to consider shifting your needs from protecting your earning years to protecting your retirement years
First, take a look at your financial situation. Do you have other assets you could tap into if you became disabled in the next 5-10 years? Do you still have a lot of debt? Are your children still dependent?
I had a client contact me today who is in his late 50s who purchased his policy over 15 years ago. His kids are now grown and in college and he has accumulated a lot of wealth. He was looking to see if he could reduce his disability policy. After reviewing his situation, we determined he could make the following changes and reduce his premiums by more than 50%:
1) We reduced his benefit period from age 65 to a 5 year benefit. He only has 5-7 more years of vulnerability until his youngest child finishes college. Most of his debt is paid off and he and his wife plan to continue to work for a long period of time.
2) Since we reduced the benefit period, we also removed the COLA cost of living adjustment rider. Since the policy is now only 5 years, this would have little impact if he needed to increase his benefits in small increments while on claim.
3) Removed the increase option riders. He is at the maximum level that he feels he will need and does not need to pay for this option any more.
In addition to making these changes, we decided to transition the risk from covering his income to covering the wealth he has accumulate. He and his wife are still healthy and decided now would be a good time to purchase a long term care insurance policy. With the money he saved by reducing his disability insurance premiums, he was able to purchase his long term care policy. Since they are in their 50’s, the premiums were relatively inexpensive and they now have the peace of mind that if something happens during their retirement years, they are covered.
For more information about disability insurance and long term care insurance, contact Set for Life Insurance today!