Individual Disability Insurance

Income Protection

Individual disability plans are designed to protect your income if you suffer any illness or injury that would prevent you from being able to work, or for a loss of income if due to an injury or illness you could not work full time.

There are some terms associated with Disability insurance that are important to understand:

Business and Group Disability Insurance Planning

Group Disability Income ProtectionThis planning allows a business to obtain Income protection for the owners and employees of a business.  The benefits of the planning are similar to the individual planning.

The advantage of the Group LTD planning is the costs are dramatically reduced for similar coverage.  It allows the owners to obtain larger amounts of coverage for themselves, and their employees, at a premium that is normally below the cost of an individual policy for the same amount.  Additionally, the policy can be guaranteed issue for a group.

This type of planning can utilize the following type of planning:

  1. Short Term Disability Coverage

    This coverage could provide a weekly income stream after an 8 day, 30 day, or 60 day elimination period.  This protection can be written to 60% of the employee’s pre-disability income to a maximum weekly benefit of $3,750.  The benefit period of this coverage is normally 83 days to 22 weeks.

  2. Long Term Disability Coverage

    This coverage would start when the benefit period for the short term coverage.  The Long Term Disability coverage would provide a monthly benefit of 60% of the employee’s pre-disability income to a maximum monthly benefit of your desire.  This maximum monthly benefit can be from $6000 to $15,000.

Disability Buy Out Insurance

A disability Buy/Out policy is normally used in a Buy/Sell agreement between principals in order for the principals to obtain the value of their business if an owner became totally disabled.  This type of coverage will provide either a lump sum benefit, installment payments, or a combination of lump sum and installment payments after a period of total disability.  The elimination period in this type of coverage is normally 12 months or longer.

The premiums are not deductible as an ordinary business expense.  The benefits are taxable as a capital gain to the disabled principal if they are in excess of his/her interest in the business.  The proceeds would not be taxable to the partnership or corporation.

Disability Business Overhead Expense Insurance

This planning provides tax free dollars to pay the business expenses, if due to illness or injury you are totally or partially disabled, and can no longer work at your own occupation.

The following are covered the normal business expenses covered by this type of policy: either rent on premises you lease for your business or mortgages payments, property tax payments, installment payments or scheduled depreciation for equipment & furniture, salaries of employees including FICA and qualified benefit programs, utilities, premiums for insurance including malpractice, accounting billing and collection fees, fees for business or professional licenses, association or trade dues & subscription, postage, business laundry, and janitorial service.

Expenses not covered are: salaries, wages, commissions or any other remuneration or employer contribution for you or any principal in your business or for any member of your profession or for any person employed to perform your duties, unless specified in the contract, any financial or insurance premiums that have been waived during your disability, the cost of any goods merchandise or inventory, any expense you were not liable prior to your disability, the portion of normal and customary business expense which is the obligation of another person then yourself, and any expenses paid by another insurance policy.