So I couldn’t sleep the other night and was doing work at about 2 a.m. and flipping through channels. I stopped on the movie “Wild Hogs”, specifically when the bad biker gang lead by Ray Liota (what a great bad guy!) was getting ready to fight Tim “The Tool Man” Taylor’s buddies. Liota has a tire iron and yells something along the lines of “Send out the money or I’ll break his legs!”
The geeky buddy yells back “I’m a computer programmer! I can work from a wheel chair!”
“Then I’ll break his hands!”
“Send out the money!”
Funny from my nerd side. But right on target from an insurance perspective in a lot of ways.
Most employers provide disability insurance at a basic level for their employees. But the biggest flaw is that the coverage is typically an “Any Occupation” coverage, as opposed to an “Own Occupation” coverage. What is the difference, and why does it matter?
If you spent four years or more going to college to get a specialized degree such as engineering or accounting or law or medicine, do you want to have to do something else that you are definitely not trained for, and did not spend a gazillion bucks on tuition and tons of time studying for? How would you like to be told “Hey, you can’t use a keyboard anymore, but you can flip burgers. You have to go to work at the Golden Arches because your XYZ Tech Company disability insurance won’t cover you.” Can happen, does happen, saw it happen.
Own Occupation (called own occ in the insurance world) says that if you can not do exactly what you were doing before, you are covered. And typically the benefits will pay monthly for a long time (like out to retirement age), and be adjusted for inflation each year. Sort of protects that investment in education, eh?
Most group coverage uses an Any Occupation definition. Now if it is free and you can not opt out, you should take it because free is good, and you have to take it anyway. But if you can opt out and get your own coverage it will be better for you. Why?
1.Own Occ, like we just talked about.
2.You are younger and healthier than the average employee, so it should cost you less for similar benefits outside the company.
3.It is portable. If you switch companies, you still take your coverage. And if you decide to do something more risky (start your own business, do something less specialized, join a biker gang, etc) you maintain your superior coverage.
4.You are healthy now. You might not be so healthy later, when you are old and fat and married and have kids and mortgages and tons of worries like I do. You can at least get your own Disability Insurance (DI) now, maybe not so later.
All this, for the cost of a beer or two or so a week. Not bad.
Now, if your employer gives you free coverage, take it and supplement it with individual coverage to cover as much of your paycheck as you can, and create additional flexibility for your future by getting a rider on your individual policy to purchase more later when your circumstances change.