Disability Insurance for Attorneys
According to US News and World Reports, the average annual income for attorneys in 2017 was over $140,000.1 Over a 30 year working career, that’s an income of more than $4,200,000. If one were to make partner at a large firm, the income potential could easily be two or three times this amount, if not more.
Disability insurance is the only type of insurance that helps replace a large portion of income for an attorney if they are too sick or too injured to earn it. Having the correct type of disability insurance contract is critical.
Disability Insurance Designed for Attorneys
Attorneys are adept at reading contracts and understanding contract language. Any policy for an attorney should have the following benefits clearly spelled out in the contract:
- Own occupation – Under a true own occupation policy, full benefits would be payable if you are unable to do the duties of your own occupation, even if you can do something else. Given the higher income of many attorneys, if you couldn’t work in your profession, you would need 100% of the benefits in your policy PLUS your new income in a new profession to get close to what you were making pre-disability.
- Partial disability benefits – Pays a proportionate amount of your total disability benefit based on your loss of income. This is critical should you find yourself working as an attorney, but seeing fewer clients, and therefore experiencing a loss of income.
- Cost of Living Adjustment – Increases your monthly benefit should you experience a long term claim.
- Future increase option – Allows you to purchase additional coverage as your income increases without having to be medically underwritten. This is especially helpful if you have a significant increase in income or lose your employer provided LTD benefits.
- Student Loan Protection – Repays a portion of your monthly student loan payment
- Retirement Protection – Ensures that retirement savings continue in the even that you can’t continue to save due to a disability.
Coverage Supplemental to Firm Provided LTD
Many attorneys who work for a large firm have employer provided Long Term Disability (LTD) coverage. These plans often limitations that should be shored up with an individual policy. These limitations may include:
- Coverage for base compensation, but not for bonuses.
- Benefits that are taxable when received.
- Maximum monthly limits that don’t replace 60% of your income. $10,000 per month is a common maximum monthly benefit.
- Coverage that isn’t portable and doesn’t provide any protection should you leave the firm.
Attorneys often make good incomes, have significant student loans, and limited income protection through their employer. It’s important to get a good individual disability insurance policy to ensure their financial future.