Your high-earning clients may be particularly vulnerable to insufficient income if they become disabled or injured and unable to work. For company executives and CEOs, a supplemental DI policy makes sense. Because it is supplemental coverage, premiums are typically less expensive and if the employee pays for the coverage from personal funds, the benefit will not be subject to income tax. Reasons to add supplemental disability insurance can be easily explained to clients by focusing on these three areas.
Reason #1: Fills the gap
The familiar employer sponsored long-term disability program is 60 percent of salary. It is not uncommon for the benefit to include a maximum benefit amount. An example would be a benefit defined as 60 percent of salary up to $5,000 monthly. The limit may work fine for the rank and file employees, but what about the executive earning an annual salary of $150,000? 60 percent of monthly salary is $7,500, a far cry from the maximum benefit amount of $5,000. Executives may not realize how disadvantaged they may be if their only source of income while disabled is the maximum benefit amount.
Reason #2: Provides many advantages over employer-paid LTD benefit
In addition to filling the benefit gap, supplemental coverage is usually portable, meaning regardless of the employer, the insured retains rights to the policy. The executive owns the policy and often pays the premium, so the coverage is not subject to premium increases or benefit changes. The benefit is not subject to income tax, meaning more money to cover expenses. Another very important difference is that the benefit is not subject to an offset with Social Security disability benefits also meaning more money for the insured.
Reason #3: Group discounts may be available
The value of supplemental coverage to an executive extends to all company executives, and even more so to the CEO. If all similarly compensated executives participate in coverage, even more advantages are ahead. When three or more people purchase coverage, the carrier usually offers a multi-life premium discount. Policies may be guaranteed standard issue, meaning that applicants with pre-existing conditions are not subject to exclusions.
One sale often leads to others
Identifying two or three clients serving as executives or CEOs can open the door to multiple sales opportunities. Approach the employer about offering executives a supplemental disability insurance program. Pointing out the financial exposure to the CEO can make a compelling case for a supplemental disability insurance program. The employer doesn’t have to pay the premium. As mentioned above, there are advantages to personally paying disability premiums.
Call DIS to request quotes for supplemental disability insurance for executives. Your DIS representative will help you design a plan that covers more salary than the group LTD plan. Turn a single supplemental DI client into other DI sales. Call us today. Also download our employer handout here.
