Slashdot Mirror
Insurance For Geeks?
esobofh asks: "It's commonplace to find actors and athletes insuring specific body parts against damage in the off chance that those body parts might sustain damage great enough to prevent them from earning an income without their use. Now that I'm making the big geek bucks, I wanted to explore insuring my hands. In the event that something might happen to them that might prevent me from typing, I want to cash out and "allow them to recover" in some tropical country - does anyone know which agencies would do this? and what sort of policy I would be looking at?" C'mon. If actors and athletes can do it, why not geeks?
Here are some things to look out for:
- Long-term disability won't pay for the first 30 days or 60 days or whatever is specified in the contract. To cover the first 30 or 60 days you would need either accured vacation/sick leave, savings, short-term disability insurance, or some combination thereof.
- If you pay for disability insurance with pre-tax dollars and you become disabled, you have to pay income tax on your disability check. If you pay for disability insurance with after-tax dollars, your disability check is tax-free.
- The maximum benefit for disability is usually 60% of your pay (for the past year) per year, to provide a disincentive to claiming disability to induced chronic fatigue or something. Thus, if possible, you want to pay for disability insurance with after-tax dollars so that the benefit will be about the same as your current take-home pay.
- If your employer offers disability insurance, I believe there is something that prevents you from buying disability insurance on your own, but I don't know what it is, whether it is a law, a tax disincentive, or an underwriter policy.
- Disability insurance doesn't pay past age 65, so make sure you get enough coverage so that you can still contribute to your IRA with your disability benefit check.
- Policies vary widely in what consider a disability and what benefits they will pay out and whether you're allowed to make some money on your hobby when you're disabled. Some policies (like those $10/month policies offered by most employers) will try to make you flip burgers if you at all can, and then say you're not disabled and not pay anything. That's why if you're serious about disability insurance you have to go to a Cadillac $100/month policy -- not many insurance companies offer good policies anymore, but Minnesota Life still does. Also, if you've been a member of IEEE for a while, you're eligible for their Financial Advantage Program group policies. Their disability insurance is almost as good as Minnesota Life's.
- Look for automatic inflation adjustment of benefits.
- You will have a choice between "level payments" and payments that increase as you get older. Since most of us aspire to early retirement and financial independence, get the latter of course, so you can simply cancel when you reach that point and not have wasted any money.
- Disability insurance is cheaper if you can get two or three buddies to do it with you. You can save 10-20% this way.
- The amount you pay depends on your profession. Some dangerous or high-risk professions don't qualify at all. So for a programmer, not only has the insurance company taken into account the possibility of carpal tunnel, but also brain damage, automobile accidents, etc. In other words, you're not a special case -- they've done this before. A supermodel insuring her legs is a unique case. A programmer insuring his hands is not -- it's simply disability insurance.
The short of it is that it is very expensive to not be financially independent. I think the goal of all Slashdot readers is to get to that point as soon as possible. In the meantime, disability insurance will ensure that in case of major accident or illness you can maintain your current standard of living.