Disability Insurance aka Income Protection Insurance helps replace your income when you cannot work due to injury or illness. According to Social Security administration, more than 1 in 4 20-year-olds will experience a disability that lasts for 90 days or longer before they reach 67 years old.
There are two main types:
Short Term Disability Insurance. Usually starts immediately after injury or illness and typically pays you for up to 6 months. Benefits are usually a limited amount per week.
Long Term Disability Insurance. Usually starts after the short-term disability is exhausted and will pay you until retirement age (or a certain number of years). Usually pays 50-60% of income up to a specific monthly max which is often around $10K.
Providing group disability insurance is a wonderful benefit both for the short- and long-term risks. However, for those highly compensated it is not enough to simply cover the same percentage across the board for all employees. Group coverage has a cap and the benefit is then taxable if employer paid. Supplementing with individual coverage either on an underwritten or guaranteed issue basis is a simple solution to protecting all employee’s income equally.
What most don’t know about Disability Insurance
For individuals, they often have not spent time reading the fine print on the group benefits, understandably. That usually means is they think they have 50-60% of their income covered. This is only true if you also make less than the monthly maximum would replace. For example, if someone has 60% income replacement up to a maximum of $10K per month, anyone making over $200K has reached the $10K max and no longer has 60% of their income protected.
There are special programs available for business owners to help continue the business or medical practice in the event of the disability of the owner. These Business Overhead Expense contracts usually pay out for 12-24 months and as such are less expensive than policies that pay out to retirement.
There are also special programs available if you have a subset of your employees who all make more than group Long Term Disability maximum supports. They are called Guaranteed Standard Issue (GSI) contracts and allow an employer with at least 3 physicians / executives with unprotected income to add further protection without going through medical underwriting. There are various employer paid and employee paid options.
What to expect when working with us
Everyone’s situation is unique, so we will first work with you to review your current situation and customize a plan to enhance it, if needed.
We broker almost all US options including Ameritas, Guardian, Mass Mutual, Met Life, Principal, The Standard and Unum as well as international options for high income or unusual cases. As independent agents we can review the marketplace and bring providers that meet your needs and budget to enhance your income protection. We also offer high limit, high risk income protection through several Lloyds of London certificate holders.
We will then work with you through the application and underwriting process. Our goal is to make it as painless as we can to get you the best contract possible.
After you have your policy in place, we will keep in regular contact with you and are available to our clients through the claims process. We have experienced how the various definitions and carriers work when the unplanned happens.
Disability Insurance FAQs
As long as you have at least 2 unrelated full-time employees you have a group and we can start to look at options to protect your income.