Disability Income Insurance
- A monthly benefit for those who have no, or insufficient, group DI coverage in order to fund the living expenses of the insured and his or her family. In particular, an individual DI policy for key executives or owners ensures maximum protection of one’s earnings, along with more favorable contract terms and conditions, relative to the typical limitations inherent with most group DI policies.
- DI insurance may also be offered by an employer to its key employees as part of an executive benefits package (with annual bonuses made to the employee to cover the premium and even potentially the associated income tax liability).
- “Multi-life” applications (on at least a minimum number of lives) receive discounts and are often priced at unisex rates, a particularly valuable feature for females given their higher rates relative to males.
- Disability retirement protection to insure one’s retirement contributions (both elective salary deferrals and employer matches/profit sharing contributions) in the event of a permanent disability to avoid undermining the future retirement plans of an individual and his or her family (as without gross wages/earned income, one may not contribute to a retirement plan).
- Owned on the payor of alimony and/or child support pursuant to a divorce settlement so that payments continue even in the event of a disability.
- Buyout insurance used to fund the buyout of a permanently disabled owner per the terms/provisions of an entity’s buy/sell Agreement.
- Business overhead expense insurance in order to enable a firm to continue to pay its fixed overhead costs, including the cost of hiring a new key employee, while an owner is permanently disabled.
- A subset of this, business reducing term disability income insurance, can cover loan repayments and other commitments until the amount due is paid off (whether required by a lender or not).