Coordination of Benefits Question

sturgbe

New Member
16
Client is earning $400,000 a year now. His group DI will pay 60% to a max of $10,000 a month. Individual DI will pay 50% to its max. Assume he purchases individual DI coverage for another $10,000 a month.

If the client is still earning $30,000 a month at moment of disability. The Group will cover its $10,000 (60% of 30,000 is $18,000, max out is $10,000)

Under this situation, how much will the individual DI Carrier Pay? I am guessing they will only pay $5,000 a month (50% of $30,000 less the group benefit amount).

If the client was earning $40,000 a month, how much would they pay?
 
Based upon the scenario given if the individual DI was purchased after the group and there is no coordination of benefit clause, then the individual plans should pay the full $10,000.

As a side note it is good that you have your client with tier 1 and tier 2 coverage. However, based upon the income, 2/3 of income can be easily protected with an excess plan (Tier 3) to cover them up to about $21,600/month in benefits.

You can contact any of the top DI Brokerage outlets for excess coverage.

All the best.
 
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