This document discusses executive disability programs, which supplement standard group long-term disability (GLTD) insurance. GLTD often has limitations like maximum monthly benefit caps of $6,000-$10,000 and not covering bonuses or retirement savings. Executive disability programs address these gaps by offering individual disability policies with higher income replacement rates, no benefit caps, and portability between jobs. The supplemental policies both enhance benefits for executives and help employers attract and retain top talent with a more comprehensive benefits package.

1. What is an Executive Disability Program?
For More Information: info@brookfieldpartners.com
866-639-0443
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Brookfield Insurance Partners is a Wholesale Brokerage Firm partnering with Insurance, Financial, and Group Benefit Brokers to assist in Executive Income Protection Plans
This is a common question that comes up with many advisors and employers. What exactly is an
Executive Disability Program – and what are the benefits?
First, let’s look at what Group Long Term Disability (GLTD) is. GLTD is coverage for all employees in the
event of an illness or injury that results in an employee being out of work for longer than three to six
months. When purchased in a group setting - rates are very inexpensive and many employers are willing
to pick up this cost and offer it a qualified wage replacement plan.
The problem we find is that many of these plans offer a limit to the amount of coverage they can offer.
Typical plan designs are 60% up to a limit of $6,000 or $10,000 per month in benefit.
What does an executive do that is making over this threshold?
This is where the Executive Disability Program can pick up! Or, what we refer to as Executive Income Protection!
GLTD commonly has the following gaps and limitations:
Salary-Only Protection: Most GLTD Programs protect up to 60% of salary, with no income
protection for other compensation such as bonuses, commissions, incentive plans and retirement
savings.
Benefit Caps: GLTD Programs typically have benefit caps based on more moderate income
levels, which may limit the amount of income replacement more highly compensated employees can
receive.
Taxes: Benefits from an Employer Paid Plan, like the usual GLTD Program plan design, are
taxable, so the actual income replacement may be significantly lower than expected.
Portability: GLTD Programs may offer a convertibility feature (although rare) and don’t offer any
portability benefits. This risk here is – what happens if the Group cancels coverage? Or, you work for a
new company without GLTD benefits? Or, the new company benefits offer a lower benefit cap?
For example, a typical employer-paid group LTD with a 60% replacement rate and monthly cap of
$10,000 would cover compensation up to $200,000. As compensation climbs above $200,000,
replacement percentages decline. At $400,000 of covered compensation, the replacement percentage
falls to 30%. Not including the reduction and erosion that taxes can play on the benefits. What about
COBRA Health Benefits? Will you be able to cover the added cost of health insurance when you are no
longer part of a Group?
Providing supplemental Individual Disability Insurance (IDI) or the opportunity to purchase supplemental
IDI at a group discounted rate is a valuable and key benefit to attract and retain top talent to your
organization.
As the employer, you can pay the premium for your eligible employees or offer supplemental IDI as a
voluntary benefit (or the opportunity to “buy up”) at a reduced group rate. If the employer pays the
premium for the supplemental IDI, the benefits are considered taxable income, significantly reducing
the income benefit. If the employee pays the premium, “buying up” or in the form of a voluntary
benefit, the benefits are not taxable.
By supplementing your group plan’s LTD, you can offer highly compensated employees an extra layer of
protection that provides greater income replacement. This integrated coverage is a good solution
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2. What is an Executive Disability Program?
For More Information: info@brookfieldpartners.com
866-639-0443
www.brookfieldpartners.com
Brookfield Insurance Partners is a Wholesale Brokerage Firm partnering with Insurance, Financial, and Group Benefit Brokers to assist in Executive Income Protection Plans
because it provides a group LTD plan for all employees at a reasonable cost, as well as supplemental
disability insurance that offers any eligible employee permanent individual coverage with some value-
added features not typically found in LTD plans. This feature also benefits those of the rank and file
class. Rank and file employees may be able to purchase an additional 10-20% of income replacement
with very little medical and financial underwriting giving them the ability to have portable benefits.
In addition to protecting employees’ total compensation and closing income replacement gaps, other
benefits of supplemental LTD typically include:
• Option for up to 100 percent income replacement coverage for catastrophic disabilities
• Custom designs that complement most group LTD plans
• Fixed employer-sponsored discounted premium (up to 35 percent) and non-cancellable
coverage to age 67
• Individually owned permanent disability coverage
• Employers and employees value offering and getting “more with less.”
As the employer, you may find multiple advantages and efficiencies from offering supplemental LTD,
such as:
• Helps attract and retain top talent
• Enhances the competitiveness of your benefits package without directly increasing your costs
• May stabilize overall rates
• Claims experience for supplemental LTD does not impact basic LTD rates
Employees value the benefits of:
• Security of a higher net income during a disability
• Portable coverage even if the employee changes jobs
• Discounted, fixed premiums
• No medical exams or lab work required
• Easy payroll deduction
The value of integrating group LTD and supplemental IDI is clear. It’s a long-term benefits solution that
can stabilize group LTD plans, limit risk and volatility, and offer high-income earners the income
replacement and enhanced coverage that better matches their needs.
Your benefits consultant can review your options with you, present various funding scenarios for
mitigating risk and cost, and assist with communication and enrollment. Some of the questions you will
want to address are:
• What forms of compensation does the plan cover?
• Does your plan cover base salary only? Bonus? Commissions? Incentive plans? Retirement
savings?
• Are these other forms of compensation a significant portion of total compensation?
• What is your maximum monthly benefit?
• Does your maximum monthly benefit leave some of your more highly compensated employees
covered at a much lower replacement percentage?
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