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Insuring the Coverage Gaps - Recent Interview with Marc Glickman

Our Principal, Bradford J. Kadelski, CLTC®, DIA, DIF, LTCP had the opportunity to be interviewed by Marc Glickman FSA,CLTC®, Founder of BuddyIns on his video podcast show "The Insurance Experts".

These video interviews are typically short snippets, and we decided to blog more of the details to the story.

At the Disability Income Protection Group, we specialize in partnering with Financial Advisors and Insurance Agents to offer outsourced disability insurance reviews and placement services. View our Advisor Services. For Advisors and Insurance Agents looking for assistance with Disability Income - find out about Becoming a Partner.

The case study discussed involves a gentleman from Boston with a wife and 2 children. He has part ownership of a tech startup and serves as their Executive Vice President. He receives salary and bonus totaling $1M, and has some benefits in place through the employer. We were introduced to him by his financial advisor.

At 45 years old, the future value of those earnings totals out to be $22M by the time he reaches 67 (not including any pay increases). Keep in mind this is the gross amount. After taxes you are looking at $669,396 Annually of Income, representing a potential take home pay of $14,726,712.

He currently has $5M in savings between retirement plans and investment accounts.

His ability to earn and generate an income is undoubtedly his largest financial asset.

While the average 40 year old worker faces a 14% chance of dying before age 65, it is found that at age 40 - 43% of all people will face some sort of long term disability lasting 90 days or longer prior to age 65. Check out some of the stats we have posted. With that amount of income on the table, this is a subject that is hard to ignore. You may think that this is something that won't happen to you, but what choice are you leaving your family if it does happen to you.

Through his employer he receives 60% of his income up to a Coverage Limit of $15,000 per month.Unlike many Group Policies we see, this policy pays for benefits after-tax. (We caution many individuals to review their Group Policies as many policies have coverage gaps and limitations that should be reviewed. Foremost the taxation and portability.) Read more on these coverage gaps from our blog post on Group DI - The Great Coverage Gap.

The employer also offers an additional supplemental benefit through an individual policy offering him $5k per month of coverage.

In total, that gives him $240,000 of coverage per year. At $1M income, he is only covering 24% of his income. That leaves the rest of his income at risk in the event of an illness or injury.

To solve the need we brought the client through a discovery process to learn what what was important to him and his family, and determine the correct amount of coverage.

This client felt that it was necessary for an additional $30k per month of coverage ($360,000 Annually) to help fill that coverage gap. To do that, we helped him place coverage through the domestic markets from a traditional insurer. Coverage had to be split between this insurer and a high limit disability insurer to make up the difference. For high income earners, coverage from traditional insurers totals up to $35k of monthly benefit. Any coverage over that amount requires going to the High Limit Marketplace. The premiums for this coverage totaled to be around 1.4% of his income. Hardly a change to his lifestyle.

If you have any questions regarding this, please reach out to your Brokerage Consultant, or contact us at:

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