High-income earners are extremely vulnerable during a disability, because they may only have 25-40 percent or less of their income protected through group LTD and Personal DI policies. High Limit Disability Insurance (HLDI) policies offer incredibly high amounts of coverage, with policies that can have coverage limits of $200,000 a month and higher.
Highly compensated people are unable to secure the amount of disability insurance coverage they need due to participation limits. Participation limits refer to the maximum amount of DI coverage offered, including coverage from other DI policies, that an insurance company can issue.
The result is that high-income earners are extremely vulnerable during a disability, because they may only have 25 - 40 percent or less of their income protected. Some forms of income such as commissions, bonuses and a K-1 might also not be covered under a traditional policy.
High-limit disability (HLDI) policies offer incredibly high amounts of coverage, with policies that can be written specifically for individuals and groups. HLDI policies can have coverage limits of $200,000 a month and higher. Also, lump sum payments as high as 10 times an individual’s annual income are available to meet the specific needs of a client.
Remember, high income doesn’t necessarily go hand in hand with being self-insured against a disability. A high-income earner isn’t self-insured against a disability until that individual has enough cash flow from assets to provide support through a disability.
Even then, there are the additional risks of changing interest rates, management of those assets (like real estate) and other market fluctuation that effect the performance of those assets. The problem for high-income earners is no different from anyone who needs to work to make ends meet, except that a high-income earner’s needed coverage amounts are much higher.
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