Key Employees

You may want to reward key employees with a benefit program that recognizes their contribution to the company's success. Income protection is a great way to do that.

Group long-term disability insurance (LTD) typically covers 50-60 percent of rank-and-file employees' income, but may cover only 25 to 35 percent of highly compensated executives' income. This can happen when the LTD monthly benefit is capped at a relatively modest level, (e.g. $6,000) or when bonus compensation is not covered by the LTD plan. Additionally, if the employer pays for group LTD, the employee receives it in after-tax dollars. Both factors can create a built-in type of reverse discrimination common in group LTD plans.

Individual disability income protection is different. It can be integrated with the group LTD plan and offered as an executive "carve out" to key employees to provide a more proportionate level of income replacement if they should become sidelined by an illness or injury. The policy is portable, too. Knowing they can own this high-quality coverage wherever they go helps to attract and retain top performers.

There are two ways to fund an individual disability insurance benefit; both offer solutions to specific business objectives.

Employer-paid

Employee-paid