High Limit Disability Insurance

The following story relays the importance of very highly compensated individuals acquiring adequate amounts of disability insurance coverage. Sadly, they are usually in the best position to acquire significant amounts of protection, but are often unaware that it is available.

Disability-Insurance.com can provide special disability insurance policies to help satisfy the needs of very highly compensated individuals.

EXECUTIVE ON LEAVE SINCE INJURY

The Los Angeles Times newspaper recently carried an article with the above headline. The article was of local and national importance because it involved the CEO of a large national company that provides many jobs in several major cities.

The firm is a stable older firm that has been pressured by Wall Street to get its profits up. Investors were not happy because the stock price has been stagnant for several years.

In response to the Investors call for action a new highly regarded CEO was brought in to run the company. The new CEO's actions were calming to Wall Street. Things at the company became very promising and the great stress that pervaded the firm was easing. Management was beginning to relax now that the stock price stabilized and was heading up.

Significantly, the story pointed out that the 55-year-old CEO injured his spine in a skiing accident in Aspen over the Christmas holiday. It reported his condition as "stable," a word chosen to minimize apprehension, but the article also laid out the fact that the CEO is on leave and his duties are being attended to by a top ranking Vice President of the firm. The details were suppressed for privacy reasons. No information as to the expected duration of the leave was expressed.

According to Petersen's International Underwriters, they have experienced similar stories from other intense and hard-hitting companies that the pattern of what lays ahead for the CEO and the company is very predictable.

Companies have little patience for disabled top executives to recuperate. Business must be tended to daily and with vigor. The disabled executive hopes to begin tenderly and work up to, once again, being a hard driving executive. The reality of the situation is that this man has a good chance of being permanently replaced. This is a sad happening in the career of a professional manager. If he recovers and becomes a viable candidate for a new management position he will have a new start, but disappointment may continue to depress him. A new position, at his age, will likely be with a smaller lesser-known company. Compensation could suffer for some time.

But he may be permanently paralyzed to the degree he will not be eligible for a new job. If he recovers, or if he remains disabled, his personal financial concerns are great. The story and the assumptions based on experience with executive disability insurance helps one be alert to the income cash flow needs of executives in the event they become disabled.

The Assumptions in This Case:

The U.S. Department of Labor Statistics studies consumers spending habits on a monthly basis. They suggest a person must have an income cash flow of 65%-75% of normal in order to stay even. CASH FLOW NEEDED to stay even - 65% of NORMAL: $54,166

Estimated Monthly Income Cash Flow Needed to Stay Even: $54,166

Disability Income Cash Flow Available From The Employers (hypothetical assumptions):

• Sick Leave
  1. Full Salary for 3 months: $27,083 per month
  2. Half Salary next 3 months: $13,541 per month
  3. Group LTD: $15,000
     Payable from 7th month up to age 65. (60% of Salary only)
     Does not cover bonus, capped at $15,000
     Net after taxes $9,000
  4. Bonus - Not applicable if disabled.



• Optional Disability Income Insurance Available on a Personal Basis
  1. Individual Non-Cancelable plan: 91st day to age 65, $10,000 per month
  2. Individual High Limit Disability plan: 91st day for 60 months, *$35,166 per month

The High Limit Disability Plan would range between *$35,166 and $45,166 depending on if he owns an individual non-can plan for $10,000 per month.

Who recommended the $35,166 HLD Plan?

• The Employee Benefits Broker?
• The Casualty Broker?
• The Financial Broker?

Probably none of the above. This subject of supplemental disability income insurance was probably brushed aside by both the CEO, and his advisor, because of the assumption that company benefits would be adequate.

The unfortunate CEO we have discussed should have had HLD to sustain his lifestyle. He may never work again or he may slowly recover. His health, his stamina, his ability to produce on a 24/7 basis will forevermore be questioned. An adequate disability program for temporary need or permanent need is the essential to maintain his lifestyle. Every executive needs advice for the reliance on the company plans may result in substantial disappointment.

See an illustration of this example.