Ask Terry Questions Long Term Disability Insurance

Long Term Disability Insurance

By Terry Savage on May 05, 2015 | Financial Planning / Retirement

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:  Well, it looks like you’re in a reasonably good place financially.  But let’s get our terms straight. Do you have “disability” insurance (which covers you if you cannot work at your own job because of some physical or mental impairment)?  Or do you have “long term care insurance” which covers you if you cannot do basic activities of daily living, such as bathing, dressing, eating, toileting, transferring from bed to chair, etc.?

If you had disability insurance and say you are “not likely to work again” and that is because of some impairment, then you should start collecting on that disability insurance now. But, if as I suspect, it is long term care insurance, I think you should keep it.  It can’t be a lot of coverage because of the low premium (which might increase in the future) — but depending on your lifestyle, you might use up a lot  of your capital before the need for long term care arises. Then you’d be glad you had it.    That’s the best advice I can give, not knowing more about the type of policy you have.

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