The Well Insured Airline Pilot?

[Captain X]

I know a pefectly insured airline pilot would actually be a CEO at a Big-3 auto-maker, a large financial institution, an airline CEO or a doctor or lawyer, but I was wondering what most people have (or are aiming for) with regards to insurance coverage.

• Term Life?
• Whole Life?
• Long-Term Disability?
• Short-Term Disability?
• Total Disability?
• Long-Term Care?
• Loss-of-License?
• AD&D Insurance?
• Etc.

 

[crxpilot]

I dont want my wife thinking I'm worth more dead than alive. Right now its about 50/50!

 

[ualdriver]

I know a pefectly insured airline pilot would actually be a CEO at a Big-3 auto-maker, a large financial institution, an airline CEO or a doctor or lawyer, but I was wondering what most people have (or are aiming for) with regards to insurance coverage.

• Term Life?
• Whole Life?
• Long-Term Disability?
• Short-Term Disability?
• Total Disability?
• Long-Term Care?
• Loss-of-License?
• AD&D Insurance?
• Etc.

LIFE INSURANCE
A pilot should have life insurance if he has dependants that are counting on his income both now and into the future, and more than likely that will take the form of term insurance. I can speak at length about the pros and cons of term life insurance vs. any other form of life insurance product that currently exists, including whole, universal, and other types of permanent life insurance products. I won't in the interest of space, but let's just say that these types of products are meant to be "sold" and for the vast majority of people, are too expensive and unnecessary. Stick with term, invest the difference......this applies to most professionals.

DISABILITY
Again, if you have dependants that are counting on you for food, clothing, shelter, college tuition, etc., then you need this. And actually, your children, your spouse, and you already have some disability insurance through the Social Security program. Every April you should get a mailing from the SS Administration telling you the amount you will be able to collect if you are disabled. Your spouse and children will also be eligible for a benefit until they reach 18 years of age (I think) if you are disabled or die.

SS disability will probably not be enough for a pilot with a family, children, and a home unless you have significant net worth. If you aren’t wealthy, then you need to consider purchasing either a short and/or long term disability insurance for yourself and/or your spouse. If you work at a union carrier, you probably already have disability insurance, and be thankful for that as disability insurance is NOT CHEAP. There are many different flavors of this type of insurance, and it costs vary depending upon how much income you want to replace (no policy will cover 100% of an income loss), whether or not you want “same job” type insurance, how long you want the payouts to last, how long of a delay you’re willing to take before payouts begin, and a bunch of other factors to lengthy to talk about here.

LONG TERM CARE
There's a lot written about whether or not one needs long term care. Unfortunately, I've recently learned a lot about how much nursing homes and assisted living costs and if you parents are getting up there in age, you might too. For example, when I was looking a few months ago in the Chicago area, assisted living in a furnished studio was going to cost around $125/day. Nursing homes can cost more.

Long term care costs less when you're young, and goes up in price as you get older and/or have health issues. From what I have read over the years, normally one starts looking at long term care insurance later in life, probably when you're in your 50's or 60's. The prices vary depending upon the daily amount that is to be paid out, how long you want the payouts to last, your age, your health, etc.

The thing that is unfortunate about long term care is that it is not cheap. If you're a high net worth individual, you probably don't need it. If you're really poor, Medicare/Medicaid will cover nursing home costs. If you're somewhere in between and can't afford long term care insurance, without proper financial/legal planning, Medicare/Medicaid could take almost all of your assets if you end up in a nursing home and can't afford the daily costs. So I guess the bottom line is if you have some amount of net worth that you want to protect, can't afford to self insure, and you're approaching your 50's or 60's, you should probably consider it.

Life insurance, disability, and health insurance to me are the “trifecta” every professional needs, pilot or not. As far as other types of policies like loss of license, accidental death and dismemberment, etc., I personally don’t buy them as the policies above pretty much cover what most people need. For example, if you lose your license, it’s more than likely because you’re taking a drug or something that won’t allow you to hold a medical any more. Disability should already cover that. Ditto if you lose a leg in a car accident. Accidental death is already covered in your life insurance. See what I mean? You could buy the stuff, but it may be redundant.

In summary, steer away from "permanent" type life insurance policies, get yourself a good disability policy, and make sure you have health insurance. If you're single with no dependants, you might not need anything. If you have any questions, post away.

I'm also not a professional financial guy or an insurance salesman, so read at your own risk.

 

[Lear70]

Be careful. Many disability products aren't just disability from flying, per se, but a disability to work in general.

This is why there's a big difference between short- and long-term disability (injury, bad illness) and Loss-of-license products such as what ALPA carries for their members.

I don't carry loss-of-license anymore; outside of ALPA is just prohibitively expensive. AFLAC carries a good short-term disability product, $3,000 a month after-tax payout starting at your 2nd week of being unable to work due to illness or injury extending for 6 months for about $13 per paycheck.

Long-term disability is usually picked up by an employer, starts at 6 months and goes for 2 years, at 66.6% (2/3) of your last 3 month average paycheck (although AAI caps that at $5,000 for a stupid grievance settlement years ago).

Life Insurance. That's a personal choice. I carry a $1 Million term life product for $26.00 a month. No restrictions on activities like skydiving, hang gliding, rock climbing, flying... I want to make sure that college is completely paid for, and there's enough interest from investing that money carefully to cover their bills for long after the kids are grown.

(House and car gets paid off by death anyway).

YMMV

 

[~~~^~~~]

Captain X:

Your questions have a lot to do with your personal circumstances, age, family and debt load. No one else's solution is going to be anywhere close to best for you. If you are insured by a Company with a full service Agent, like State Farm, it would be well worth stopping by. You will probably end up saving money on by optimizing your current coverage - so at the least you will save some money rationalizing your deductibles and aligning your uninsured motorist coverage (depending on your State's laws). Worst case, you'll get a 2009 calendar. You don't have to buy anything, but you will walk out of the office with much more information than you had when you arrived. Also, if you are employed by an ALPA carrier, a quick call to your Retirement and Insurance guy will give you some excellent information.

I'm curious how Whole Life products are holding up with the market's implosion. I have some State Farm no load investment products (not Whole Life, but managed by the same team) and they have out-performed every other investment.

I'm a believer in having a relationship with an insurer and an Agent. When you need the insurer to deliver on the promise they sold you it makes a difference. Shop around so you know what a decent deal is. Good deals are not usually good deals in insurance. Look for longevity and stability.

(I'm not sure what Lear 70 means by house and car get paid off by death. That is sometimes true, but not always the case)

~~~^~~~

 

[DTW320]

(I'm not sure what Lear 70 means by house and car get paid off by death. That is sometimes true, but not always the case)

Yeah, sounds like mortgage life and it's equivalent for car loans. Generally, VERY expensive for the amount covered. Would recommend more term insurance to cover those things. Much cheaper.

BTW, get more term now, don't put it off. There are MANY medical things that can happen to you tomorrow that will make it impossible or very expensive to get term.

 

[list2002]

Oops... thought it said well endowed pilot.

 

[~~~^~~~]

Yeah, sounds like mortgage life and it's equivalent for car loans. Generally, VERY expensive for the amount covered. Would recommend more term insurance to cover those things. Much cheaper.

BTW, get more term now, don't put it off. There are MANY medical things that can happen to you tomorrow that will make it impossible or very expensive to get term.

Good advice.

 

[MJ42]

Oops... thought it said well endowed pilot.

F/A's have their own section. Maybe you can find a "partner" there???uke:

 

[igneousy2]

I stacked my coverage... I have a 1.0 million 20 year level term policy and a 30 year 500k policy. After 20 years I shouldn't need as much life insurance. I pay rougly $50 for each of the policies. A 1.5M 20 year policy would have been cheaper but not long enough...and a 1.5M 30 year policy would have been more than I wanted to spend at about $150. I wanted to keep it under $100 a month.

Later