Executive Disability Income
Most companies provide a group disability policy for all employees with a benefit percentage of 60 percent. The trouble with this approach is that most benefit maximums are usually too low for highly compensated executives. Many times the high earning executives are being reversibly discriminated against and only replacing 45 percent or less of salary. To make matters worse the benefit on group plans are usually taxed. Now when the executive needs the benefit the most, there is an even greater short fall.
Many companies try to fix the problem by raising the group plan maximum limit. This approach has pitfalls: the higher maximum raises the premium rates for all employees, higher maximums usually do not cover income replacement for executives and creates a tremendous claim liability for the entire group. If one executive becomes disabled the claim reserve is huge. Inevitably, the extra claim reserves will cause the premiums to increase for the entire group. The end result, the company pays more for high maximum group disability programs, accepts more exposure usually with no medical underwriting.
Corporate Financial has a better solution: We analyze and redesign group platforms that serve as a chassis for executive individual disability policies, usually with no medical indemnity. These executive individual disability policies can:
- Protects income over the group plan limits
- The policy is portable and rates will not increase
- Benefits will keep pace with inflation
- Can include bonuses, stock options, and 401K contributions, Deferred Compensation
An executive disability program can give your company the competitive advantage in recruiting, retaining and rewarding key executives. It can also help your company to have:
- Premium Savings
- Stable Premiums
- Reduce Claim Exposure Liability
- Improve Benefits