 |
Disability insurance planning is an often overlooked aspect of your life. Are you guilty of assuming that "you have it at work"?
There are two major types of disability insurance available to employees;
group long term disability (LTD) insurance, and individual disability
insurance. A group long term disability insurance plan typically is designed
to replace 60% of base salary to a monthly maximum spelled out in the
policy. A majority of group LTD plans on the market typically cover 60%
of base salary to a maximum of $5,000 a month. Notice that bonus income,
as well as commission income is often not covered.
Group long term disability insurance is taxable to an employee who goes
on claim assuming the employer was paying the premiums for the coverage.
The only way to make up the lost taxes during a claim is to have purchased
an individual supplemental disability insurance policy that layers on
top of your group coverage before the claim ever happened. Having both
group long term disability, and an individual disability insurance policy
allows you to have the maximum income replacement available during
a disability insurance claim. It also gives you the power to know that
if your employer ever dropped the coverage, or you ever left your current
position, that you would still have your own disability insurance. You
can also have the ability to convert a large percentage of your group
LTD into your supplemental disability insurance plan when you leave your
current employer.
Many people earning an income over $100,000 a year are severely underinsured
when it comes to group long term disability insurance. Since the monthly
maximum is usually around $5,000 a month, any income over $100,000 a year
should be insured with individual disability insurance layered on top
of the group plan.
Call 888-513-2300 Shortfalls of Group Long Term Disability Insurances
- Benefits are taxable if your employer pays the premium
- More restrictive definitions within the policy
- Many have a 2 year maximum on drug, alcohol, mental and nervous disabilities
- No rate guarantees
Benefits of Individual Disability Insurance
- Benefits are received to you tax free if you pay the premium
- More liberal definitions within the policy to pay you more money in more claims scenarios
- Berkshire has no drug, alcohol, mental or nervous limitations except
in FL. (FL limit 2 yrs)
- Higher monthly benefits in the $10-15,000 a month range
- Rate guarantees to age 65
- Fully portable if you ever leave your current job
- Guarantees your insurability for the rest of your working years
Solution
We always recommend to people that they supplement their group long term disability insurance with a small individual disability insurance plan. The individual plan will lock in your insurability for the rest of your working years, and provide you with a higher income replacement should you ever experience a disability claim. Having both coverages takes you from living off of 40% of your income after taxes, to almost 70% of your income after taxes. An individual disability insurance supplemental plan is very inexpensive, but gives you the comfort of knowing that your income will always be protected regardless of your employers plan, regardless of whether or not you ever leave your current job, and regardless of whether or not you ever have a change in health history. Our coverage will grow with your income well above the group limits as well.
*2 year limitation in Florida.
Call 888-513-2300
|
|
