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The “Third-Tier” Of Income Protection For Top Wage Earners

The need for income protection in this country is clear – statistics show a common lack of personal savings amongst the majority of households. And top earners are not immune.
 
Although major corporations typically provide Disability Insurance (DI) through employer sponsored programs or voluntary employee-funded group DI plans, most physician and executive programs insufficiently limit benefits to a fraction of earned income – creating a great financial shortfall for high-income individuals.
 
The answer? A prescription of raised limits of DI throughout the market.

A high-cap excess personal DI is a great way for physicians, attorneys, accountants, and white-collar executives to find appropriate levels of economic safeguard.

We can provide a variety of “third-tier” Income Protection products to meet your client’s needs – and ensure the financial safety of your affluent and under-insured clientele.
 
The plan can be as simple or comprehensive as your clients’ needs require.
 
Securing individual DI is another obvious step – but again, traditional domestic disability carriers frequently fall short with their maximum issue limitations. If you have any clients or prospects who are making over $250,000 annually, they should be insured at least up to 65% to 75% of their earnings. Their protection needs may not be met by group coverage even with the addition of a layer of individual DI. The bundling of group and individual DI alone is not always a sufficient solution.
 
As a life/health insurance advisor, you know better than anyone that a sudden injury or prolonged illness can happen to anyone at any stage of their professional career.
 
Contact your DI Specialist for more information on “Third-Tier” coverage.
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Have You Heard About The M.U.G. Plan?

The M.U.G. plan is a new innovative Disability Insurance sales concept that helps provide your clients with funds in the event they become disabled.

This simple approach will help open doors to new opportunities and possibly allow you to up-sell to clients who need more coverage.

The M.U.G. plan is designed to cover:
  • Mortgages
  • Utilities
  • Groceries
This policy is designed to be more affordable than a comprehensive coverage policy and still provide income to help pay for a clients mortgage, utilities and groceries if they are unable to work due to a disability.
 
The M.U.G. plan helps eliminate client confusion regarding how much insurance coverage is actually needed. Simply ask your client how much do you spend each month on your mortgage, utilities and groceries?
 
To learn more about the M.U.G. plan and how to approach your clients about Disability Income Insurance contact your Disability Income Insurance Specialist today.
 
Download the customizable marketing flyer for the M.U.G. plan below.
 
Return the completed flyer to your Marketing Representative for a meaningful recommendation of protection for your clients.
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Don’t Wait To Hear From Your Clients About Disability Protection

As a Financial Professional, you have an incredible opportunity with clients, friends, and acquaintances that you interact with on a daily basis – they are all in need of an Income Protection Plan.

Bankers, Pharmacists, Dentists, Veterinarians, Grocery Clerks, Doctors, Real Estate Agents, Accountants, Restaurant Owners, Attorneys, Faith Leaders… these are just some of the people you may bump into on any given day.  What do they all have in common?  They all work hard to earn an income to provide for themselves and their families.  

Yet the thought of incurring a sickness or having an accident that would prevent them from working and earning a valuable income often goes overlooked.  You can help.  Simply ask them one question, “Do you have a plan if you get sick or hurt and couldn’t work?”  Then let them know you have an affordable strategy that would help take care of their living expenses should something happen.

Don’t wait to get the call from one of your long-term clients or close friends stating they have been in an accident or have gotten sick and they can no longer work – when you could have had the discussion with them about a Disability Income Protection Plan.  

The financial strain on a family dealing with a long-term illness or recovery from an accident can be financially catastrophic.

Even if you have already had an income protection discussion with your clients in the past and even if they had a plan through work or had an individual plan in place, still ask the question.  They may have changed jobs since you last spoke or let their individual coverage go during our economic downturn. There may be an opportunity now that did not exist in the past.

The best time to contact your clients, friends and acquaintances is right now!

Statistically, the odds are 1 in 4 workers entering the workforce will incur an illness or injury that would prevent them from working for 90 days or longer before they retire.

My experience has shown that people proactively seeking to buy Disability Income protection usually, but not always, already have some kind of a health concern that makes applying for protection more difficult.  Their policy could be issued with limited benefits or some kind of an exclusion for a pre-existing condition.  They could even be declined for the coverage depending on the severity of their health history.

Reach out to your clients while they are still healthy – their rates will never be lower than they are right now.  Recent innovations in the Disability Income market have made it more affordable than ever to secure the coverage your clients need to live their regular lifestyle during the recovery from an illness or injury.  Disability Insurance allows individuals time to focus on their recovery process rather than worrying about the financial strain that comes with not receiving a regular paycheck while still having bills to pay.

Don’t waste time with the prospects who “just don’t get it”.  You will find that there are many people out there that do “get it” and want to learn more.

We have a dedicated Disability Income Team to support your Disability Income marketing efforts; and offer innovative tools you can use to help get the word out to your clients that you are in the Income Protection Business.  We can provide you with the guidance you need to find each of your clients the best plan the industry has to offer.

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DI Retirement Security

Do you have clients who’ve maxed out their Disability Insurance coverage and could possibly be leaving their retirement unfunded if they got sick or hurt?
 
Try DI Retirement Security (DIRS). It provides coverage for individuals to help them continue to make retirement contributions if they become unable to work due to disability.

Since retirement contributions are not necessary to qualify for this coverage, any individual in a qualifying occupation (class A through 5A Select) earning at least $76,000 per year can apply for DIRS.

Coverage also does not diminish eligibility for regular individual Disability Income (DI) Insurance. This means an individual can qualify for DIRS even if he or she already has a regular individual DI policy up to the maximum issue and participation limits.
 
How DIRS Works
  • If the insured is disabled beyond the elimination period, benefit payments are made to an irrevocable trust. These proceeds are not accessible until age 65 or 67 (depending on the Benefit Period selected).
  • The insured directs the investment of the funds to fit his or her investment style and risk tolerance, using a number of investment options within the trust. There is a $50 per month trust administration fee.
  • The trust is activated only after the insured meets the elimination period requirement and benefits begin. Trust earnings are taxable each year to claimants/ insureds, unless they selected a non-taxable investment instrument.
  • Claim benefits paid to the trust are non-taxable if the insured pays the DIRS premium. Benefits are taxable if an employer pays the premium and the premium is not considered income to the employee.
  • At the end of the Benefit Period, trust assets are distributed to the insured per the terms of the trust agreement.
DIRS Features
  • Coverage provides a maximum benefit up to 15% of earned income, with a minimum benefit requirement of $1,000 per month. For 2023, the maximum benefit is $4,550 per month ($5,850 per month if the benefit is taxable).
  • Available elimination periods are 180 or 365 days.
  • Benefit periods are To Age 65 or 67, with “Your Occupation” periods of two years, five years, Age 65 or Age 67.
  • Optional riders include: Future Benefit Increase, Cost-of-Living Adjustment and Mental/Nervous Substance Abuse Disorder Limitation.
If DIRS is written as a stand-alone policy with no other DI coverage applied for or in force, then simplified underwriting guidelines are used. If the client applies for other DI coverage along with the DIRS application, full underwriting applies. Employer groups that qualify for a multi-life discount also receive the discount on DIRS policies.
 
For more information contact your Disability Income Insurance Specialist today.
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Giving A Vanilla Non-Qualified Fringe Benefit More Flavor

He may be old news now, but Jay Leno was very big news back in 1992 when took charge of The Tonight Show, replacing the “King of Late Night,” Johnny Carson, who had dominated post-primetime ratings for 30 years.  A stand-up comedian by trade, Leno liked to joke that he had three steps in his job description:  Write joke.  Tell joke.  Get check!

Too often we tend to think just as simply regarding executive bonus plans, the most flexible and least complicated benefit in the non-qualified marketplace:  Offer benefit.  Buy policy.  Write check!

In fact, as show host Leno had to significantly broaden his approach to handle the greater responsibilities of his new role.  And we should do the same to demonstrate how a broader executive bonus plan might be the most attractive and most versatile way to lock in key employees.

Consider how an employer-sponsored, executive-owned plan can address a far-reaching array of risk management needs:
  • Income Replacement 101 – A person’s most valuable asset is the ability to generate income.  Dollars spent on an executive bonus plan don’t have to be committed to life insurance.  Consider using a portion of the plan cost for an income replacement policy to provide tax-free dollars if disability occurs during working years.
  • Income Replacement 102 – Pre-mature death will also deny an employee’s family income.  Benefit dollars can also be used to economically fund a term insurance policy large enough to replace the income that was anticipated over the remaining years of a key employee’s working life.
  • Estate Liquidity – Employees with death tax issues aren’t the only ones who need liquid flexibility to assure effective settlement of their estate.  Consider funding a portion of the death coverage for income replacement with a permanent policy which will provide cash in the estate for the life of the employee.
  • Critical Illness and Long-term Care Expenses – Nothing can unexpectedly disrupt sufficient growth of net worth for retirement more than either of these two events.  Life policy riders can economically offer protection, especially if added to permanent coverage already intended as part of the executive bonus plan.
Two planning suggestions will further enhance the attractiveness and value of the plan:
  • Avoid sticker-shock – The benefit cost is deductible to an employer, but forewarn the plan participant that the amount will appear on next year’s W-2.  Even better, determine the amount to spend on the plan, withhold the anticipated tax due, and then spend only the balance on coverage.
  • Make it a true lifetime benefit – Structure premium schedules that result in paid-up policies, making it unnecessary for the employee to incur cost to carry coverage beyond retirement.

To further discuss this “super executive bonus” concept, or any advanced marketing issues in your casework, contact Tom Virkler at 706-614-3796 or tom@cpsadvancedmarkets.com.

For What It’s Worth:  Relying on income from other sources, Jay Leno never spent the money from the checks for his $10-15 million salary from The Tonight Show.  His net worth is estimated at around $500 million.  He currently hosts Leno’s Garage which features his $52 million collection of classic automobiles.

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Coverage For Americans Working In Global Conflict Zones

Ongoing conflicts — such as the Russia-Ukraine war, tensions between Israel and Palestine, and recent escalations involving Israel, Iran, and the U.S. — have increased the presence of Americans in high-risk regions. Many are deployed for consulting, logistics, training, security, journalism, and humanitarian work.

We are currently supporting brokers and companies sending employees and subcontractors to areas like Eastern Europe and the Middle East. These roles, though high-risk, remain critical. Nonprofits, healthcare providers, and private security firms continue to send personnel to conflict zones to support local efforts.

Americans are also active in other unstable regions, including Haiti and parts of Africa. Given the risks, many are seeking specialized insurance to mitigate financial exposure and ensure personal protection.

We offer a range of products tailored for individuals and employees operating in or near conflict areas. Coverage options include:
  • Accidental Death Insurance with War and Terrorism Benefits
  • Medical Evacuation Coverage
  • Disability and Repatriation Insurance
  • Travel Medical Insurance
  • Kidnap and Ransom Benefits

These solutions are available to U.S. residents and employees of U.S.-based organizations operating overseas.

For more information, contact your DI Marketing Specialist.

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New Proprietary Disability Coverage For Professional Athletes

Professional athletes are at higher risk of injury every time they train, practice, and compete. It’s not surprising, then, that professional athletes were among five occupations that had more than 1,000 injuries per 10,000 workers – according to the Bureau of Labor Statistics.

Getting hurt is a part of sports, but to a professional athlete it can mean a significant financial setback – or worse, the end of a career.

Each sport commands unique contract features, including guaranteed income to a player – some contracts are fully guaranteed while others allow the team to waive the contract as they see fit.
 
A variety of flexible solutions are now available to protect a professional athlete during their current arrangement with their professional organization or if they have not yet signed a long-term agreement.
 
Critical Injury/Illness

Covers professional athletes for major injuries – whether career ending or not. Therefore, if the athlete were to tear their ACL, Achilles, Patellar, etc. and return to play the following season, they could still collect a predetermined lump sum benefit to cover loss of income during their recovery.

Loss of Value

Not all injuries or illnesses cause career ending disabilities, but some can certainly cause a diminishment of physical ability. An athlete may insure skill level with the “loss of value” coverage. If a player, projected to be a first round draft pick, suffers a significant injury before the draft and isn’t selected until the third round, the athlete stands to lose a sizable contract. This type of coverage may also be used by professionals prior to re-signing contracts.

Draft Protection

Young athletes commit their lives to reaching the big leagues. But before a player is even able to sign a professional contract, they are at risk of losing everything they’ve worked to achieve should they become disabled due to an injury or an illness. This will not only affect their draft value, but if severe enough, may destroy their chances of being drafted at all.

Contact Us

All plans are tailored to fit each athlete’s unique situation – which is easy when you work with as many providers as we do. Contact us today to learn more about how you can protect your client’s financial future.

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Are Your Clients’ Retirement Dreams Protected?

Insurance and Financial Advisors help their clients save and prepare for retirement, but have you thought about what would happen to your clients’ retirement dreams if they became too sick or hurt to work and could no longer:
 
  • Save for retirement?
  • Contribute to their qualified retirement plans and receive employer matches (if available)?
  • Contribute to Social Security?

Even a short-term disability and loss of regular salary can eliminate years of savings and jeopardize your clients’ retirement dreams.

The Solution: Offer Disability Income Retirement Security

Disability Insurance Retirement Security is an innovative program that helps clients ensure their ability to continue saving for retirement in the event of any type of long-term or total disability.

It is ideal for individuals who:
  • Make at least $76,000 per year
  • Already have Disability Insurance – Group Long-Term Disability and/or Individual Disability Insurance
  • Understand the importance of Retirement Planning

You don’t need to be a Disability Income expert, we’re here to help. Contact your Disability Income Specialist with product questions, and for illustrations, case design and implementation.

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Disability Income Executive Bonus Plan

Many firms are finding it harder to obtain, retain, and reward select key employees and executives. Using a little known technique, employers can use special benefit options to give “select employees” Disability Income protection in the form of company paid tax deductible benefits.
 
I have found that a 162 Executive Bonus Plan is one of the best methods for employers who want to provide non qualified benefits to select employees on a legally discriminatory basis and also want to attract and retain quality long term employees.
 
How does it work?
 
The Executive Bonus involves the purchase of a Disability Income policy on the life of a select employee. The employer pays the premium on the disability policy and includes the premium in the taxable wages of the employee.

Because the employee is reporting the premium as income, the benefits from the policy then become tax free if the employee should get sick or hurt.

With the Executive Bonus, the employer will take a full income tax deduction for the premiums paid under section 162 of the I.R.C.
 
It has been my experience that some employers choose to pay not only the premium amount, but also the employees’ portion of the taxes that will be due on the premium. This second “bonus” pays the employees’ income tax on the first premium and creates what is called a double bonus plan.
 
Benefits to the employer:
  • Employer Selects Key Employees
  • Employer Receives Tax Deduction
  • Fully Discriminatory
  • Offering Customized Benefits
  • Easy Implementation
  • No Administration Beyond Normal Payroll
Benefits to the employee:
  • Employee has Disability Benefits
  • Employee Owns the DI contract
  • Disability Benefits are Tax Free
  • Little or No Out-of-Pocket cost
  • The Policy is Portable
  • Future Insurability can be Guaranteed
Last but not least:
  • Employer payments are wages to the employee and are subject to FICA and FUTA
  • A Sole Proprietor or owner of S Corporation may not deduct premiums on his or her Individual Disability Insurance. Such premiums are nondeductible personal expenses. IRC Section 262. A sole proprietor may however deduct premiums on an employee of the sole proprietorship.
  • The employer may not take a tax deduction for premium paid on Individual Disability Insurance if the policy is corporate owned in terms of Key-man Replacement and Disability Buyout.
  • Business Overhead Expense Premiums are deductible for Business Expenses
Please contact your Disability Income Sales Rep to discuss any potential opportunities you may have.
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Protect Your Clients With A Family History Of Cancer, Stroke Or Heart Disease

While the chances of surviving a critical illness such as cancer, heart attack, or stroke are greater than ever, living with the condition can create a severe financial hardship for many of our clients.
 
Traditional health insurance plans cover medical expenses such as Hospital, Physician and Pharmacy. However, additional costs such as the insurance deductibles, child care, insurance premiums, and short-term home health care must often be paid by the recovering patient directly.
 
Critical Illness Insurance pays a tax-free lump sum payment on first diagnosis of any one of a list of 20 serious illnesses – including cancer, heart attacks, or stroke.

Claims statistics suggest we are 5 times more likely to survive rather than die before we reach age 65 of cancer, heart attack or stroke.

The good news is, medical advances make it so more people are surviving conditions that might have killed us years ago. For example, more than 90% of men diagnosed with testicular cancer are still alive 5 years after first diagnosis, and 80% of women diagnosed with breast cancer have the same survival rate. Over 5.8 million stroke survivors are alive today, many of them with permanent stroke related disabilities.
 
We have availability to several Critical Illness carriers that offer unique policies to meet your client’s needs.
 
We have found one plan in particular that offers a very comprehensive benefit plan at a very affordable the cost.
 
Think of putting your premium dollars into a safety deposit box and if you are diagnosed with one of the 20 covered conditions (including Alzheimer’s Disease and Loss of Independent Living) the policy will pay the face value. Or if you die of one of the covered illnesses the policy will pay the face value to your beneficiary. If you should die of any other reason, 100% of all premium paid towards the plan will be returned to the beneficiary as a tax-free death benefit.
 
While most critical illness policies have a reduction of benefit at age 65, we have Critical Illness contracts that extend the full benefits to age 70.
 
The likelihood of surviving a critical illness grows every year as does the threat of being diagnosed. The coverage is affordable. A $50,000 benefit for a male, age 40, will cost approximately $52 a month. In addition to the lifetime version of the product, there is a choice of 10-15-20 and 30 year coverage periods. There is a plan to fit any budget with benefits up to $500,000.
 
Critical Illness Insurance is one of the best kept secrets in the industry and provides advisors a great opportunity right now to meet more clients, help more families and increase sales. Look to your clients with a family history of Cancer, Heart Disease, or Hypertension. They are very likely to be interested in purchasing protection.
 
Contact your Disability Insurance Specialists for detailed information about a plan that meets your client’s needs and budget.

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