Because of the limits put on the benefit available under traditional disability income insurance, there are a lot of people who would fall well short of being able to maintain their lifestyle if disabled.
The standard of the industry is 60% of your salary, usually with a maximum of $16,600 a month which is 60% of $200,000. There is no benefit for bonuses, so if your salary was $200,000 and you got a bonus each year that ranged from $50,000 to $150,000, your disability income benefit would be capped at $16,600. If you made $100,000 and made a minimum $100,000 bonus every year, your maximum disability benefit would be based on $100,000, $8300 per month.
I know the 99% really don’t care about this, but even those of us who aren’t in the top 1% income wise are capped in the same ways. The only difference is the numbers are smaller.
Take a scenario where a large law firm has half a dozen partners and 50 other attorneys that work there. The average attorney there makes $200,000 a year, but the partners make $500,000 or $1,000,000. They have a group disability income policy that pays 60% up to a max benefit of $16,600. That works great for the standard attorney, but the partners at $500,000 would be getting a benefit of 33% and those founding partners making $1,000,000 would be taking home a 16% benefit. With traditional companies the partners would not be allowed to take out excess coverage. Any company offering disability income insurance would only insure them up to a total of $16,600 including all other insurance in force.
So what’s a successful man or woman to do? Here’s a thought.? Lloyds of London has just rolled out a supplemental disability plan that allows highly paid executives, partners, CEO’s or whoever needs it to buy supplemental coverage that will bring them up to 60% of their salary and bonuses. They can be carved out from the rest of the group which traditional insurance doesn’t allow. The prices are very reasonable and it can be purchased on a guaranteed issue basis.
What about those who aren’t part of a group and clearly can’t make up their income with traditional disability income? Lloyds has very reasonably priced, although fully underwritten plans for that situation also with benefit limits as high as $250,000 a month. This product is also available as disability overhead expense insurance. Sample Quote.
Bottom line. Clearly not one shoe fits all and as in so many other life insurance business situations Lloyds is the company that steps forward with that set of shoes that’s a perfect fit. If you have any questions or need a quote call or email me directly. Let’s talk.