Supplementary disability income insurance has been around for decades, but for the highly compensated individual, domestic coverage just scratches the surface.
For example, if you were one of the 424,870 Americans making over $1 million annually and had a typical employer disability group plan of $15,000 per month, would you be able to live on 18% of your paycheck if you became seriously disabled or ill?
Typical employer-provided group long term disability limits are in the $15,000 per month range. As an illustration, if a highly paid CEO at a pharmaceutical company is earning somewhere in the $1,000,000-plus range and suddenly becomes disabled, most group long-term disability income
insurers will cap the monthly disability income at $15,000 per month. The high net worth executive bringing in more than $83,000 per month — and who has built a lifestyle for his or her family that revolves around that figure — is now in for a rude awakening when he or she comes to the realization that their monthly income has suddenly dropped by 82%.
Traditional group long-term disability insurance can also be supplemented by a second tier in the form of a supplemental plan using individual disability income insurance (IDI), which can increase disability replacement income to a combined $35,000 per month or so, which is deemed adequate for salaries in the $700,000 range. However, it’s a proverbial drop in the ocean when the pharmaceutical CEO is earning $1 million (before bonuses).
The primary problem here is underinsurance. Most traditional insurance brokers are simply unaware that a viable option exists to fully insure their highly compensated clients. The secondary problem occurs when a void exists in the U.S. insurance market and the coverage an individual is seeking is simply unavailable - think those in the entertainment business and professional athletes. However, thanks to the powerful resources offered through the Excess DI market, high earning individuals can access extraordinary benefit limits to supplement the programs they have purchased here in the U.S. or secure coverage where options did not exist.
When you are advising high-income clients, you’re protecting those who have maintained the wherewithal to achieve the American Dream. Make no mistake, elite advisors understand the value of what’s at risk, and without incorporating the proper income protection strategy, they are leaving their high-income earners, their families and their lifestyle in jeopardy.
The bottom line is that there now exists an exciting new opportunity for advisors to present to their highly compensated clients unique insurance solutions that can supplement what is being offered by traditional carriers. These plans are designed to meet their client’s unique needs and objectives.
If you want to learn more about the Excess DI markets, please join us for our webinar on May 19th, where we'll discuss the insurance solutions available and review case studies.
