Insurance question - income replacement

[Priller]

I'm in the market to swap insurance yet again, and am comparing quotes for my Moto Guzzi (which, in the grand tradition of Ontario insurance being inexplicable, is marginally more expensive to cover than my Tuono).

One thing I see is the base income replacement coverage is a hilariously low $400/wk. Bumping that to the highest (thought still very low) coverage of $1000/wk adds $3-400/yr to the premium, so isn't an insignificant bump. In my case it takes the Guzzi coverage from ~$1500/yr to over $1850/yr.

My question is whether this is a useful addition? On the face of it, it seems like absolutely critical coverage. In a bad scenario, I could be left unable to work for potentially quite a long period of time, and as I make a good bit more than my wife, this would put us into a tough spot. Even $1000/wk would be a stretch.

But on the other hand, for what seems like critical coverage, I never hear anyone talking about it. Is it something that is typically covered elsewhere, such as short-term disability etc via an employer? And then therefore adding the coverage is redundant and unnecessary? My own employee benefits are actually pretty crap, but my wife's are excellent and I'm covered as a spouse.

Curious to hear anyone's thoughts...

 

[GreyGhost]

$400/yr for coverage that is rarely required and pays out $600/wk (probably capped at two years max] seems terribly priced. I suspect you could get similar stand-alone coverage for less money and that would cover you for any injury not just one on the bike.

I would probably add the yearly premium to investments. If it becomes desperate, start selling them to keep the house of cards up and work until I'm older or downsize the house. If I don't need it, I get to retire a little earlier.

Edit:
Reading the fine print would be required but rbc charges ~$130/yr for $500/wk coverage.

Cover Your Expenses If You Get Sick or Injured

If you can't work due to illness or injury, RBC Simplified Disability Insurance is an easy and affordable way to protect your income. Visit RBC Insurance to get a quick quote now!

www.rbcinsurance.com

 

[Priller]

$400/yr for coverage that is rarely required and pays out $600/wk (probably capped at two years max] seems terribly priced. I suspect you could get similar stand-alone coverage for less money and that would cover you for any injury not just one on the bike.

I would probably add the yearly premium to investments. If it becomes desperate, start selling them to keep the house of cards up and work until I'm older or downsize the house. If I don't need it, I get to retire a little earlier.

Edit:
Reading the fine print would be required but rbc charges ~$130/yr for $500/wk coverage.

Cover Your Expenses If You Get Sick or Injured

If you can't work due to illness or injury, RBC Simplified Disability Insurance is an easy and affordable way to protect your income. Visit RBC Insurance to get a quick quote now!

www.rbcinsurance.com

Ah, the two year cap is fine print I missed. Definitely makes it less compelling. Would cap the payout value at $62,400, which could be covered by other means in a pinch.

That said, the above RBC coverage is paid per month, not week. The highest coverage they offer is $1500/mo, or about $346/wk, for $214/yr, so no better and probably worse value (depending on fine print) than the motorcycle policy, which is actually closer to $300/yr for nearly double the benefits...

 

[AllistonGT]

Just a thought. If I'm retired and don't need the income replacement, can I opt out of it completely?

 

[PrivatePilot]

I pay for *all* of the upgrades on my insurance. Given as how I ride a lot, of course that means my risk of accident is higher, so it only makes sense to cover myself well.

It adds about $800/year to my policy, which is quite a signifigant portion of my policy as a whole on my current bike. It's not a cheap bike to insure to begin with due to it's rarity, so yeah, it adds up.

Income replacement is only one part of the upgrades available on Ontario insurance - caregiver coverage, emergency medical, and all sorts of other things that you hope you'll never need are also upgrades. But if things go very, very bad and you end up needing 24/7 care and feeding through a straw for the rest of your days, this coverage means you won't be a burden to your family. For me, that's worth $800/year in a hobby that is already expensive.

Just make sure to read the fine print. If your employer has wage loss or other benefits, or you have coverage elsewhere, they typically become the first payer, with your insurance topping up, so you need to make sure it's worth the money in the end. Also check how long the coverages are for - life vs term, or dollar caps.

 

[Gary]

Just a thought. If I'm retired and don't need the income replacement, can I opt out of it completely?

No.......I've tried every renewal since 1996.

 

[Priller]

Just a thought. If I'm retired and don't need the income replacement, can I opt out of it completely?

In looking this up, there was some discussion about making it optional as part of a 'cost saving' measure, but I don't think it was ever approved. As someone else pointed out, with the Ontario Insurance Cartels in charge, making it optional would simply mean removing it from existing rates at essentially zero discount, then charging even more if you did want to add it on. As demonstrated by previous 'cost saving' efforts. Coverage gets smaller, rates stay the same or higher...

To give an example of how busted it is, the base $400/wk coverage hasn't changed in over 30 years, despite ~86% inflation in that time.

Just make sure to read the fine print. If your employer has wage loss or other benefits, or you have coverage elsewhere, they typically become the first payer, with your insurance topping up, so you need to make sure it's worth the money in the end. Also check how long the coverages are for - life vs term, or dollar caps.

Income replacement is capped at two years, from what I read. From there, I assume the expectation is you would have transferred to Long-Term Disability should the inability to work continue. Is it worth ~$300/yr? Hard to say. In a pinch I could pull from savings and investments to get through a couple years.

All that said, I ran some changes through the NFP online quote machine, and got the following added costs to a base comprehensive coverage rate with $2M liability and $500 claim deductibles:

- $1000/wk Income Replacement (from $400/wk base): $191/yr
- $1M non-catastrophic medical (from $65,000 base): $73/yr
- $2M catastrophic medical (from $1M base): $24/yr

Incidentally, the NFP quote is a full $350/yr cheaper than my existing TD rate, so assuming they hold that after calling tomorrow, looks like I'll be doing my annual insurance jump. Ontario insurance is so awesome, totally consumer friendly and extremely cost effective.