Executive Disability Plans
Most companies provide a group disability policy for all employees with a maximum benefit of 60% of total compensation. For highly compensated executives, the benefit maximums are usually too low. High-earning executives may sometimes receive only 45% (or less) of their salary. In addition, group plans are usually taxed.
Some companies compensate by raising the group plan maximum limit. However, the higher maximum raises the premium rates for all employees, creating a tremendous claim liability for the entire group. If one executive becomes disabled, the claim reserve is huge. Inevitably, the extra claim reserves will cause the premiums to increase for the entire group. The end result:
- the company pays more for high maximum group disability programs, and
- accepts more exposure usually with no medical underwriting.
Executive Disability Insurance coverage provides an added layer of protection to fill the gap left by most group disability plans.
Related Information
Executive Individual Disability policies can:
- Protect income over the group plan limits
- Keep pace with inflation
- Include bonuses, stock options, and 401K contributions, deferred compensation
