Did you know that the majority of employer-sponsored long-term disability (LTD) plans aren’t designed with higher salaries in mind? This is why many HR professionals and leadership teams are not aware of how underinsured their top talent is in the event of a disability.
Your executives and physicians aren’t able to get adequate long-term disability underwriting concessions on their own so providing this coverage can be a great recruiting tool! Most physicians are already familiar with supplemental LTD policies as medical schools often instruct their students to buy additional policies to ensure their disability protection keeps up with their growing income.
Now, let’s break down the difference between a standard LTD plan and an executive and physician LTD program.
The average LTD policy covers up to 60 percent of an employee’s income, depending, of course, on the designated maximum amount. It’s not uncommon for high-wage earners to be covered at less than 40 percent of their income should they become disabled.
This gap in coverage could be devastating for a highly-compensated employee, which is why we recommend that organizations provide a supplemental executive and physician LTD policy. The additional layer of coverage helps businesses protect their key employees and offer a more competitive benefits package to potential hires.
An executive and physician LTD program can provide up to 75 percent of current pre-tax income. This coverage can be offered on a voluntary or employer-paid basis and as individual policies, executives and physicians would own the policy and can take it with them if they leave or retire. Many insurance carriers will offer deep discounts on executive and physician disability premiums and the policies can be guaranteed issue, which means there are no exclusions for pre-existing conditions and no invasive medical exams required.
This additional coverage would also apply to other types of compensation like bonuses and commissions while still providing inflationary safeguards. Keep in mind that most group policies have specific limitations on key conditions, such as mental health and substance abuse so be sure to discuss the specifics of your disability program with a benefits professional.
Want to know how your organization’s disability coverage stacks up?
Contact a member of G&A’s Employee Benefits team for an evaluation of your life and disability coverage.