Disability Income Insurance - Earned Income Protection

The purpose of Disability Income Insurance is to provide  an income to professionals and entrepreneurs who are disabled and can no  longer work and earn an income. For people like you, your earned income  is your greatest financial asset. It provides the means to obtain  essential living necessities such as food, clothing and housing, as well  as resources to fund college education and retirement.  Your business  interests, home and automobile are insured or protected for catastrophic  losses. The ability to generate your annual earned income should be  protected as well.

The Need for Income Protection

LIMRA Reference

Key Contractual Provisions:

  • Non-Cancellable and Guaranteed Renewable 
  • Elimination and Benefit Periods
  • Occupation definitions
  • Definition of Disability 

It  is equally important to discuss how to pay the premium as it is to  discuss policy provisions that include; waiting periods, benefit periods  etc.   Most purchasers of disability insurance will receive the  benefits income

  • Personally paid premium – 100% tax-free benefits
  • Executive Bonus paid – premium – reported as income and tax-free benefits
  • Corporate paid premium – 100% and not reported as income the benefits are 100% taxable.

LC  Advisor can review current individual and company sponsored disability  income programs as well as determine if earned income is adequately  protected. 

[1] 9th Annual MetLife Employee Benefit Trends Study 2011