Disability Insurance

This is a follow up my question that you answereed on May 5 (it is copied below). The insurance I have is long term disability, which covers me if I cannot work due to a physical or mental imapairment; it is not long term care insurance. I am in excellent health and probably won’t work again.

Should I cancel this policy?

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I am 59 years old, single, no mortgage, with two grown children living on their own, have been out of work for a few years and not likely to work again. I have over $1.5 million in savings and investments, not counting Social Security, which I don’t plan on taking until I am 70 at which point I would get over $2,700/month.

I also have a long term disabillity insurance policy which would pay approximately $3,000 after 90 days and am wondering if I should cancel it given my situation. I pay about $1,100/year for the policy.

Thanks for your input and for a great website.

Terry Says:   So, I’m trying to remember what I said before.  But if you’re not working, you might have a tough time collecting on the disability insurance if you became disabled.  It requires you to demonstrate that you cannot go back to your “own occupation” if you bought a good policy. It looks like you think you can cover your expenses without working anyway.  It’s sort of a shame that you put a lot of money into the policy,  and I typically advise keeping them till you get to collect SS, and I suppose you should be glad you didn’t need to use it!  Ask your agent (who will be biased, because of ongoing commissions) whether he/she can make a good argument for keeping it if you are not working.