Perspective on Disability Insurance for Highly/Variable Compensated Employees

The American College and MassMutual commissioned the study, Employer Perspectives on Disability Benefits, in order to better understand what employers are offering in disability coverage and to identify potential shortfalls and gaps in these offerings. The study was conducted by the Boston Research Group, a leading strategic market research and consulting firm specializing in the financial services industry. Benefit managers, or those most familiar with their company’s group long term disability plan, were interviewed by telephone. From a list of the 3,000 largest companies, 316 interviews were completed. Key findings overview highlights the responses of the companies interviewed for this study.

Overview of findings will be presented including the Base Disability Plan, Potential Coverage Gaps, the ability to purchase Buy-Up coverage within Group Plans and finally the purchase of Supplemental Individual Coverage.

Topical highlights include the following:
Base Disability Plan-the typical benefit amount of a group disability plan is less than the employee’s salary – 60 percent on average. In most cases, the benefit is taxable – further reducing the amount an employee would receive.
Potential Coverage Gaps- variable compensation (such as bonuses) in most cases are not covered.
Buy-Up Disability Coverage-For employees of most companies, the somewhat limited base plan is the only option. However, a few companies offer “buy-up” coverage, paid for by the employee, usually with after-tax dollars.
Supplemental Individual Disability Coverage- Supplemental individual coverage offers the opportunity to customize a long-term disability solution for an individual to help meet his or her unique needs.

Generally speaking, benefits managers regard their group long-term disability plan as an important part of their company’s benefit package. However, they feel that employees don’t necessarily feel as strongly. Insurance is an intangible product that can’t be seen, felt or tasted. Experienced benefits managers are more likely to have observed real-life cases of disability claims and understand the difference insurance can make to an individual and his or her family.
What makes a good group long-term disability plan? It depends on many things, such as a company’s size or its culture. Disability coverage offers a combination of many options to help protect an employee’s ability to earn an income. Plan decisions are best considered carefully and re-evaluated frequently.

Employee Benefit Managers and Human Resource Executives of Professional Service Firms or any company which include Highly or Variable Compensated individuals wherein the Base Disability Plan is not sufficient to cover the risk of lost income. Companies that come to mind are Law/Consulting and Accounting Firms. Also Investment Companies including Banks, Investment Brokerages and Hedge Funds.

I: Brief overview of current USA Disability Insurance Market. II: Benchmark results for Corporations purchasing Disability Insurance with employee range from 2,300 to 29,000 III: Evaluating methods of closing gaps for Disability limits applicable to high/variable wage earners

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		Alfred V Norton III Charter Oak Insurance and Financial Services Co. View Profile