Last year, I was talked into convinced that I needed to purchase disability insurance because the teaching position I’m currently in doesn’t offer this benefit and I wouldn’t qualify for state disability based on my annual Social Security reports. So I decided that for $55 a month, I could have the peace of mind that if anything happened to me and I couldn’t work, I’d be entitled to a very small monthly disability payment; $1,500 to be exact. To clarify a little more, working for a school district that doesn’t deduct Social Security, but instead deducts money towards a pension plan, excludes me from receiving any kind of state disability (I haven’t earned enough credits). Or at least that’s what the insurance salesman told me last year when I signed up for this plan.
I also am under the impression that my pension plan doesn’t offer disability and am awaiting an answer to this question as I type. If they offer any kind of payment, that alone would give me enough incentive to cancel this additional policy and put that $55 monthly payment towards retirement instead.
So here’s my quandry: Do I continue paying disability insurance with the underlying notion that someday I might become too injured or too sick to work – at least before the pension plan’s retirement age of 55 (that’s still 17 years from now)? Is such a low monthly disability payment worth it? Or is this plan worth it’s $660 annual premium?
I reread my policy and realized that that are some exclusions and limitations to the plan; for instance in most cases I would only be paid the $1,500 monthly amount for a period of 6-months, which totals $9,000. If I keep paying my policy for the next 13 years, I will have paid this much in premium payments. However, if I instead invest this monthly amount into my current savings account, at the end of 14 years, I will have saved $9,982 at a measly interest rate of 1.09% (the current savings rate).
If I instead invest this amount into a 403(b), at an annual rate of return of 4% I will have $12, 943 after 14 years. This might be a better option that paying towards a policy I may never need.
What do you think? Should I continue paying on this policy just in case I become ill or disabled? Or, should I instead invest it in my future?