An Advisors' Guide to Excess & Surplus Disability Insurance

6 Excess & Surplus Disability Programs Every Advisor Should Know About

Posted Wed, Aug, 15th, 2018
By Exceptional Risk Advisors

There are six products that make up the core programs in an excess & surplus disability insurance portfolio. The first four are personal programs purchased by individuals to protect their futures, the last two are business programs utilized to insure a business owners equity or the human capital one brings to an organization.  By incorporating these six products into your insurance services practice, you are sure to differentiate your practice, add new lines of revenue and make a big impact on the solutions you can present to affluent and high income markets. 

1. High Limit Disability Income Protection: By sheer product volume, this is the leader in the excess & surplus disability market. High limit disability income protection is most often utilized to supplement an individual’s US disability insurance coverage to provide adequate protection for high income earners. This type of coverage typically provides an “own occupation” definition of disability. The ideal candidate for this type of coverage are CEOs, CFOs, COOs, CTOs, hedge fund, private equity and financial professionals, attorneys and specialty physicians/surgeons.

2. Multi-Life Guaranteed Issue Disability Income Protection: For organizations employing high earning individuals, a High Limit Guaranteed Standard Issue (GSI) program is available which allows employers to leverage their institutional buying power, reducing coverage costs and policy underwriting requirements to streamline the application process. The employers group Long Term Disability (LTD) and domestic supplemental Individual Disability Income (IDI) programs must be maximized before an excess & surplus GSI policy can be offered. There are four different types of GSI programs: mandatory, mandatory with buy-up, opt-out, and voluntary plans.

3. Disability Income Protection for Entertainers: Entertainers present unique challenge to US disability carriers as their earnings history is often riddled with volatility, and they consistently present a compressed career that limits the time they earn the bulk of their income. For those reasons, the excess & surplus lines market are the primary sources to obtain Disability Income Protection for Entertainers.
4. Disability Income Protection for Athletes: Similar to the entertainment field, a void in the US disability market leaves these professionals without a domestic option for disability income protection. For college and professional athletes, an excess & surplus policy provides “own occupation” coverage that designed to pay a lump sum benefit for career ending injury or illness.

5. Key Person Disability Insurance: For organizations with Key Executives who are vital to the financial success of their business, a corporately owned Key Person Disability Insurance program is available with a policy structure that will provide the organization a benefit in the event their key person is injured or suffers an illness.

6. Buy-Sell Disability Insurance: For successful business owners maintaining a buy-sell agreement within their partnership, insuring the stock repurchase requirements in the event of a disability can prove challenging in US disability markets. US disability carriers provide this type of insurance up to a benefit maximum of roughly $2-3M per insured (this benefit varies across carriers and the state in which coverage is being issued). For business owners with additional Buy-Sell Disability funding requirements, a supplemental Disability Buy-Sell Insurance policy can be issued to reduce the business burden to repurchase a disabled partners equity beyond what is available from domestic carriers.

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