Disability insurance tends to be one of the most overlooked benefit programs in corporate America today. However, an employee experiencing a disability event is a real threat to employers, as 25% of employees entering the workforce today will experience a disability event lasting 90 days or longer during their working years. Group Long Term Disability (LTD) plans provide an essential foundation of coverage for your company’s employees. Unfortunately, LTD plans may often fall short in addressing the income replacement needs of highly compensated employees.
Group LTD May Not Cover Everything You Think It Does
The graphic below illustrates that employees making over $120,000 a year will receive less than the 60% income replacement plan design should they become disabled with only the sample group plan as there is a $10,000/monthly maximum benefit.
Corporate sponsorship of coverage provides key benefits:
- Guaranteed Issue coverage – no medical underwriting
- Salary and performance-based compensation covered
- Lower Cost Coverage than employees buying policies on their own in the retail market
- Multi-Life guaranteed issue rates are 10-30% lower than traditional individual rates
- 66% of individuals applying for disability insurance either get declined or rated
- Portable coverage allows executives to take their policy with them in case of employment change
For more information on how Individual Disability Insurance solves the income replacement needs of your employees, please contact your Mullin Barens Sanford Associate. Schedule a call via this link to learn more.
About Mullin Barens Sanford Financial
Through a powerful combination of independence and experience, Mullin Barens Sanford Financial and Insurance Services (MBS Financial) is a leading consulting firm that assists companies with 409A and other executive benefit needs.
Disclaimer: The materials are designed to convey accurate and authoritative information concerning the subject matter covered. However, they are provided with the understanding that Mullin Barens Sanford does not engage in the practice of law, or give tax, legal or accounting advice. For advice in these areas please consult your appropriate advisors.
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