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Ask Dave

Not Wanting To Cancel

Tim needs to get some information from Dave about some certain types of long term disability insurance.

QUESTION: Tim and his wife will be debt free in June except the house and make $100,000. He wonders what the difference is between guaranteed and non-cancellable guaranteed long term disability insurance. Also, if he is close to being debt free, how much disability does he need?

ANSWER: You usually can only get about $75,000 in coverage anyway, so you are approaching the top. You just have to ask yourself; if you were disabled, what do you want to live on? I don’t worry about the short-term disabilities, because if you are debt free with an emergency fund, you can handle those. It’s the stuff that keeps you incapacitated for 10 years or the rest of your life that you need to look out for. Financially, that’s worse than death.

Non-cancellable just means that if you got into some health situation, they can’t cancel on you or drop you. As long as I’m not paying some huge premium, I want that.