A majority of employees have Disability Income coverage sponsored by their employer. However, they are unaware of how much coverage their plan would provide if they were to be too sick or hurt to work.
Many individuals live with a false sense of security regarding their Income Protection plan – believing that if an accident were to occur, they would be financially set until they could return to work.
A typical group Disability Insurance policy covers 60% of their base income. This can be a good income replacement safety net. However, benefits are usually taxed and the remaining after-tax monthly benefit could be as little as 42% of a person’s regular base income. For highly compensated employees, this amount could be even lower if there is a monthly benefit cap, or if incentive pay or bonuses are not covered by their plan.
Fill the gap by offering an Individual Disability Income insurance policy in conjunction with the Group Long-Term Disability (LTD) insurance. This additional coverage can bring your client’s income back to approximately 80% of their pre-disability earnings and can be offered on a simplified issue basis. With no exams or tax returns, they can buy up to $7,500 off additional monthly income protection. Plus, when three or more lives are covered with Individual DI insurance policies and share a common employer, all are eligible for at least a 20% discount on unisex rates.
So, when your client says they don’t need an Income Protection plan because they are already covered through work, don’t let that be the end of your conversation. Find out exactly what their plan would pay them if they were unable to work, and if those benefits would be taxable to them. A small amount of additional coverage can put them right where they need to be: financially sound.
For more information on how you can provide your clients with the coverage they need – contact your Disability Income Specialist today.
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