High Earners Income Replacement Disability Insurance
It is hard to face the fact that a disability can happen at any time, to anyone. For high-income earners, trying to get by on traditional Income Replacement Disability insurance could result in huge financial losses. All income earners need to protect themselves and their families from the ruinous fiscal consequences of a debilitating injury or illness. Personal Income Replacement Disability Insurance allows people to not only continue fostering their children's quality education and put three well balanced meals on the table, but to continue living in the manner to which they have become accustomed. If people are properly insured, families can continue to live comfortably, even in the face of a temporary or permanent disability.
Traditional Disability Insurance companies generally offer the most comprehensive policy wording but there is one structural deficiency: The traditional carriers have "issue limits" that will not allow a high-earner to purchase enough Disability Insurance to replace their income and protect their lifestyle. The answer is to "top-up" using Special High-Limit Disability Insurance from a specialized insurance provider.
Case Study: Mr. S, age 43, a successful businessman with a wife, three children and an annual income of $300,000. Although he has the maximum monthly disability benefit available through the traditional carriers, it only offers a 47% replacement of his income. This would not be enough income replacement to cover his mortgage, living expenses and the private education tuition for his three children. He needs an additional $4,500 per month in disability benefits to bring his disability income to 65% of his employment income.
The extra coverage is available from our High-Limit Disability Insurance provider.
As well as financial restrictions placed by traditional Disability Insurance companies, some people are deemed uninsurable because of their age, their employment in a risky occupation, the location of their workplace, their medical history, "risky" avocations, or frequent international travel.
There is Disability Insurance available for most working people, who are not satisfied with coverage from the traditional market. Plans can be custom designed for clients from most industries and financial backgrounds.
The intention is not to compete with traditional disability carriers who offer excellent Disability Insurance products, but to supplement coverage where needed, and to offer coverage when other carriers cannot.
Business Overhead Disability Insurance
When a self-employed person is unable to work due to a disability, his or her personal life will not be the only victim. Personal Income Replacement Disability plans keep wage earners and their families living comfortably, but what will happen to the business while the owner is unable to work? Companies need cash flow to pay the rent, keep the lights on, fulfill monthly paycheques and take care of other necessities. If a disability keeps the owner or professional from working, his or her company could be forced to close for a short time, or even permanently. Businesses that close temporarily, even for a few months, often cannot regain their footing. Customers and clients can drift away, and good staff may look seriously at job alternatives. High Limit Business Overhead Disability Insurance will keep a disabled person's business functioning smoothly until he or she returns to work.
Case Study: Mr. C. is a partner in a law practice with Ms. D. There are four other lawyers in the firm. Traditional disability insurance companies do not want to offer Business Overhead to the partners because there are other lawyers to "do the work". This is not an issue for a specialty Disability Insurance carrier, who will issue Business Overhead Disability coverage, because they understand that the other lawyers are already working at full capacity, and cannot take the overflow if one of the partners is disabled.
We have sources for up to $50,000 per month of Business Overhead Disability insurance, so there is no reason to be underinsured.
If your work is crucial to your company, obtaining a Business Overhead Insurance Plan is highly recommended and responsible. The plan will provide business stability during an unstable time for the company, and help to ensure the company's clients that despite the hiccup the company is strong and reliable. Business Overhead Insurance takes care of the bills when you are not able to.
Buy-Sell Disability Insurance
Businesses with more than one owner often draw up a buy-out plan should one of the owners die. In the event of an unexpected death the buy/sell plan ensures the stability of the company. Unfortunately, while most people plan for an unexpected death, many overlook the possibility of an injury or sickness permanently disabling one of the partners; even though a disability is much more likely! Buy-Sell Disability Insurance is invaluable in this type of situation.
Case Study: Mr. S. is age 59 and a participant in a buy-sell agreement. As a shareholder/partner, he is obligated to buy out the business interest of Mr. R., if Mr. R. becomes permanently disabled. The firm has prospered and is now worth $4 million. His share of the buyout is $1.5 million. When the company was new the buyout would have been a liability of only $100,000, but even so Disability Buy-Sell Insurance was purchased. It was increased over time and now provides a benefit of $400,000. This falls short of the purchase price by over $1 million. Not a comfortable cheque to write! The bank was approached but weren't comfortable advancing money to a firm that just lost the services of one of the founders and key people.
For a company, the sudden disability of a partner can be more detrimental than his or her death. In the Case Study, a disability buyout was in place, just not properly funded. Without a buyout, the healthy partner can be burdened by the disabled partner. The disabled owner, not able to productively contribute any longer (but now on sidelines with lots of time on his hands), constantly raises concerns about how the company is being managed and suggests changes. If the disabled person is still earning a salary but not contributing positively to the company it would be in the company's best interest for the healthy partner or partners to buy out their disabled partner.
Prescribing adequate amounts of Disability Buy-Sell Insurance is a perfect solution to this problem, and an effective way to save the company from financial distress.
Buy-In Disability Insurance
When an individual is invited to become a partner in a professional practice or business, there is usually a period of time that involves the buying-in. During this period the deal is riding on the fact that the individual becoming a partner has the finances to buy into the company. A disability could really throw a wrench in the plan.
Should the person becoming a partner become disabled during the buy-in period, there could be significant problems with the completion of the deal. Without the ability to continue working, the disabled person might not be able to afford to buy into the company. Unfortunately, because the disabled is not a full partner at the company, a traditional Buy Sell Disability Insurance plan will not cover him or her. In this type of situation a specialized High Limit Disability Buy-In Insurance policy would cover the Buy-In agreement.
Case Study: Mr. E. owns a successful manufacturing business. Mr. E. would like to sell his business to his son Mr. E. Jr., who has been working at the business for the last 15 years. The plan is that E. Jr. will buy 10% of the business each year for the next ten years just by reducing his salary 25%. Mr. E. has a wife and other children to consider, and all his financial and estate plans depend upon the completion of the Buy-In by E. Jr.
Traditional Disability Insurance companies do not like the idea of insuring family members in a Buy-In/ Buy-Sell situation. Second, since the Buy-In is not complete but is in stages, traditional Disability Insurance carriers will not underwrite the risk.
We have a source for Buy-In Disability Insurance that will reassure both parties that the Buy-In will be completed and that the financial obligations stated in the contract will be fulfilled.
Key Person Disability Insurance
The majority of companies have key people who are essential to the success of the business. Whether these people are valuable because of their expertise, power, innovativeness or information, losing them (even temporarily) could be incredibly detrimental to a company. Key Person Disability Insurance provides crucial benefits to protect the company financially in the event that a key employee can no longer work due to a disability. Key Person coverage provides cash flow to help companies move forward and maintain a profit in the event that a key employee becomes disabled. In this situation, High Limit Disability Insurance is invaluable, because traditional disability companies only offer Key Person coverage in limited amounts.
Case Study: An accounting firm was doing a total remake of the accounting system of one of their clients. The project was to run roughly one year. Two months before completion, the partner coordinating the program was lost from service due to cancer. Despite plans to "backup" at every stage of the project, with both computer protection and intellectual backup, it was discovered that there were some aspects of the project planning process known only to the now-unwell partner. It cost the accounting firm several hundred thousand dollars to cover completion penalties, replacement personnel, and lost productivity with key employees spending time re-doing parts of the project.
Key Person Disability Insurance is designed to insure key employees who may have the important clientele relationships, hold the company's major accounts, or know essential information that is imperative to the functioning of the business. If the key employee is totally and permanently disabled, this information may not be retrievable from the individual, leaving the company struggling to find alternate methods of recovering the information and maintaining relationships with key customers. These additional challenges become very expensive; Key Person Disability Insurance will cover them.
Pension Completion Disability Insurance
If a disability, from an accident or illness, strikes while one is building a pension plan, the results can be catastrophic. Suddenly, with no income, or living on Disability Insurance proceeds, the disabled person can no longer contribute to his or her retirement plan. A disability does not just create immediate financial troubles; the future becomes incredibly uncertain as well. Will a disability put off your retirement? Will a disability cut your retirement income in half? Pension Completion Disability Insurance will ease these concerns so you can stop worrying about the stability of your future and focus on the present. Similarly, if you do become disabled, with proper disability insurance plans in place, you can concentrate on getting healthy again, without letting fears and concerns about your income during retirement affect your judgment about the proper path of treatment and recovery.
Contract Guarantee Disability Insurance
Signing a contract obligates both parties to stand by their initial agreement. Unfortunately, unforeseen circumstances can inhibit people and companies from carrying out the terms of the contract. One party's inability to fulfill the terms of the contract could mean the other party takes a huge financial loss.
Case Study: Ms. Q., age 55, is an executive of a large company. She was hired at an annual salary of $600,000 plus bonus opportunities. Her benefit package includes Group LTD insurance to cover 65% of her base salary. She believed her bonus income was covered by the LTD. The HR Department soon found out they had a major problem with the negotiated contract. The LTD plan had a $20,000 cap and would only cover base salary. Who would make up the $12,500 per month disability coverage needed to provide 65% of income? Traditional disability companies will not be able to insure this risk. However, special High-Limit Disability Insurance is available in this situation.
Whether a contract is between a company and employee, business partners, or divorced couples, almost all contractual relationships can be considered under this disability program. Make sure your contracts are secure and protected against the disability of a participant, with Contract Guarantee Disability Insurance.
Spousal and Family Support Disability Insurance
Often, a divorced income-earner will have financial obligations to his or her ex-spouse and children. Many separation agreements have terms that are so onerous to an income-earner that, if disabled, all of the person's disability insurance will be going to another household, leaving no way for the disabled person to support themselves. Traditional disability insurance issue limits do not take into consideration this special set of circumstances.
Case Study: Dr. M., age 55, earns $350,000 per year as a Surgeon. He has the maximum amount of disability insurance available from traditional carriers. In the event of disability it nets him roughly 45% of his income. Under the terms of his separation agreement, he is obliged to pay most of that to his former wife for ten years. He has remarried and has two children under age 10, and a second household to run. If he becomes disabled, he will have less than 10% of his income, after separation payments, to clothe and feed his second family and young children.
Special Top-Up Income Replacement Disability Insurance can be found to enable Dr. M. to satisfy his separation agreement and provide for his second family in the event he becomes disabled.
Loan Indemnification Disability Insurance
Often, when a bank lends money to a business, they will require the borrowers to provide life insurance to cover the outstanding loan amount. This is sensible, however there are significantly more disabilities than deaths. The banks should be asking for disability insurance to cover the payments.
Alternatively, if you are a borrower, because of probabilities, you should be more concerned about the impact of disability than death. If a business owner is disabled, aside from trying to recover their health, there are major concerns for the business. To know that the bank will be satisfied removes what will be one of the greatest areas of concern for a disabled business owner.
Case Study: Ms. G. runs a successful advertising and marketing firm. She employs fifteen people. They are all highly skilled but she is the marketing person, has the client contacts, and co-ordinates and oversees all projects. Because of cash-flow fluctuations (common in her business) and a recent expansion, she is using part of her $600,000 bank line-of-credit. If she becomes disabled, income and cash-flow will be severely impaired, meeting payroll will be a challenge, some staff will take one of the job offers they are constantly receiving, and the bank will be very antsy about the loan.
Most often, Business Overhead Expense insurance plan benefit periods are too short to satisfy a loan. Additionally, while it may be advantageous for the bank, asking an individual to assign his or her personal disability benefits to the bank would leave the insured's family seriously vulnerable financially.
A High-Limit Loan Indemnification Disability Insurance Plan will satisfy the bank requirements, and give a disabled business owner a chance at business survival. Monthly benefit periods from 1 year to 10 years are available and there are also lump sum benefit options. The plan can be set up to mirror the loan terms with a declining benefit. Keep your business secure with Loan Indemnification Disability Insurance.
Severance Agreement Disability Insurance
An interesting problem develops when the termination of an employee involves a severance package and part of that package is the requirement to continue benefits such as Long Term Disability Insurance. Under most Group LTD contracts, the terminated employee cannot be kept on the group LTD plan. Unfortunately, finding traditional individual disability insurance is not an available option since the person is currently unemployed.
Case Study: Mr. P. age 57, an executive of a bank, had in place a severance agreement in the event of a "change in control". Finding his job to be redundant, the new management terminated Mr. P. Under the severance agreement the continuation of certain benefits included that of the group LTD plan. When HR contacted their group carrier to arrange for this change, they were advised that they would not be able to provide continuing coverage due to the fact that Mr.P. was no longer on the payroll. The HR department reached out to the traditional disability insurance market and were advised that they too could not help since Mr. P. was currently unemployed.
What would work in this tough situation? Special High-Limit Disability coverage for a terminated employee is available to fulfill a severance agreement!
Severance Agreement Disability Insurance will keep the terminated employee and his family safe, as well as keep the company from a major financial loss.
If you have a disability concern that is not acceptable to the traditional disability insurance companies, don't assume you're out of luck. Contact us to see if we can help.
This product is highly specialized with very few insurance people working in this area. Accordingly, there is very limited information on the Internet.
Here is an eleven minute video on highly-specialized disability planning for entrepreneurs and other high earning professionals, by an American counterpart:
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