High-limit Disability

[Brian Anderson]

A new article from Ted Tafaro (link below) has some viable options for how to prevent high-earning professionals from being severely underinsured in their disability coverage. A doctor or lawyer earning $1.2 million per year would want more than 30% of that income replaced in the event of a disability, but getting to an acceptable level can be a challenge. This approach can double it. Thoughts?

Insurance Forums | The evolution of high-limit disability plans

 

[TPetersen]

Hello Brian

If your question ("Thoughts") is on the need for high limit disability plans, then:

Excess Disability plans (High Limit) have been available for many many years and are a very important part of income protection for the higher income folks.

The traditional markets, financial experts, and our own insurance educational outlets all agree that about 2/3 of income is required to MAINTAIN a lifestyle. This is regardless of income. A higher income executive may allocate the same PERCENTAGE of income toward a home mortgage, but the DOLLAR amount may be higher than the limits of the traditional disability carriers. The need is the same regardless of income.

There is a belief that a person who makes a higher income may have assets that can be liquidated if needed for living during a disability. Really? Isn't insurance designed to maintain a lifestyle, not deplete it just because you have been able to make more money?

If your question ("Thoughts") is on the article itself, then:

Ted always makes excellent points in his articles and he is an expert at what he does. The article focuses more on individual high limit disability programs which are excellent and do offer the fullest protection. However, the article did not mention that excess (High Limit) disability plans are also available in a GSI form. Using the article example, yes the single attorney is able to secure more coverage individually, but if he/she has partners (likely) they may all be needing additional disability protection and as such a GSI plan is another option that can be used and at the same time provides no underwriting and discounts on the premiums. Score!

Insurance advisors should always look at the fullest of coverage for their clients. Traditional Group (Tier 1), Traditional Individual DI (Tier 2) and Excess programs (Tier 3) all fit their niches and are readily available through most disability brokerage outlets.

Just my 2 cents!

 

[Brian Anderson]

However, the article did not mention that excess (High Limit) disability plans are also available in a GSI form. Using the article example, yes the single attorney is able to secure more coverage individually, but if he/she has partners (likely) they may all be needing additional disability protection and as such a GSI plan is another option that can be used and at the same time provides no underwriting and discounts on the premiums. Score!

Interesting - and thanks for all the feedback Thomas!