If you currently carry an individual disability policy and change jobs to where they have a group policy, should you drop your individual disability coverage?
Before dropping an individual disability policy, it is important to consider the following when making a decision:
1) Group policy benefits are taxable if your employer is paying the benefits.
2) There are limits on group policies, typically around $10,000/month. After taxes that equates to $7000/month
3) Group policies usually require you to be totally disabled and not working whereas an individual policy covers you if you can’t work in your occupation or medical specialty.
4) By keeping your individual policy, it is portable and you can increase it later if you ever leave your employer.
Instead of dropping the policy, you may want to consider reducing the benefit amount instead. This will allow you to supplement your coverage and fill in the gaps. This will also protect your insurability as well.
Before making any decisions, it is important to discuss your options with your broker to ensure you are making a prudent decision.
