DIAM '16: Real Life

Friday, May 6, 2016
I've always discounted the 'value' of group (aka employer provided) life and disability insurance. Typically, these are designed not to be there when you need it. No, I don't mean that they won't pay off on a claim, but rather that they're typically not actually in force at claim time (eg new job, unemployed or retired, etc). The challenge has always been that this is a judgement call; that is, I had no way to objectively quantify it.

Until now, that is, and at least for the disability portion:

I've been working on a case for a well-compensated local exec, whose paycheck renders her eligible for up to $12,500 a month benefit. She already owns a $5,000 per month policy on her own, and her employer-paid group disability plan provides an additional $7,500 to that.

Those playing along at home will notice that this seems to indicate that my client can't buy any more on her own: $12,500 less the $5,000 private plan and the $7,500 group cover equals zero.

But a funny thing happened:

It turns out that the two carriers I contacted about this case both offered an additional $4,000 a month benefit. Which tells me that they've discounted the group plan by almost 50%. So at least in this instance, I can put a quantifiable value on that group coverage.

Interesting, no?