Relying solely upon employee benefits will economically cripple an individual if that person were to suffer a total disability due to illness or injury before retirement. Consider an employee with the following benefits:
- Group LTD – 60% of income to $5,000 per month
- Group Life/AD&D – benefit of two times income
- Group Medical Insurance – comprehensive coverage
- Annual income of $120,000
At first glance, this appears to be a solid, appropriate employment package, but it is severely flawed. Focusing on the provided disability benefit, as per this example, the employer deducts the Group LTD premiums from corporate taxes, and therefore, any claimed benefits would be taxable. Since the plan has a maximum benefit of $5,000 per month, benefits have a beginning limitation of only 50% of employee income.
Now examine the circumstances surrounding a total disability. The employee becomes disabled for more than 180 days, and his/her employment contract stipulates that he/she will be let go at that time. Based upon the termination, the employee must convert the Group Medical Insurance to COBRA and pay a very expensive monthly premium. Taking into account that the monthly DI benefits are taxable and the employee now has to pay COBRA premiums, the amount of income covered under the Group LTD plan is now estimated at 30% to 40% of earnings – the employee is drastically underinsured considering the income-protection industry recommended standard of 65% coverage of income.
If you are searching the market for a method to diffuse that financial time bomb, look no further. Corporate Financial, Inc. specializes in excess, high limit disability products that can be placed on top of Group LTD and individual DI plans. This supplemental insurance can bring an employee’s disability coverage levels up to 65% to 75% of earnings.
Don’t let unforeseen accidents or illnesses jeopardize the economic survival of your valued clients. Diffuse any possibility of a major financial explosion by prescribing excess disability insurance in amounts sufficient to monetarily support personal liabilities and standards of living.