Excess & High-Limit Disability Insurance
Excess and High-Limit Disability Insurance is designed for high-income individuals whose income protection needs may exceed the benefit limits available through traditional Individual Disability Insurance or Group Long-Term Disability coverage.
By providing an additional layer of disability protection, these specialized solutions can help address income gaps for executives, business owners, highly compensated professionals, and others with significant earned income.
What Is Excess & High-Limit Disability Insurance?
Excess and High-Limit Disability Insurance provides additional disability coverage when an individual's income protection needs exceed the amount available through traditional disability insurance carriers or existing employer-provided benefits.
Rather than replacing traditional coverage, excess disability insurance is often used as an additional layer of protection above existing Individual DI or Group LTD.
Depending on the solution, benefits may be structured to provide additional monthly disability income or other forms of coverage designed around the insured's financial exposure.
Why Can High-Income Individuals Have Disability Insurance Gaps?
Disability insurance is generally designed to replace only a portion of earned income, and traditional insurance carriers establish limits on the amount of coverage they will issue and participate in with other disability insurance.
For highly compensated individuals, these limits can result in a significant difference between pre-disability earnings and the amount of income protected by traditional coverage.
Potential gaps can become even greater when compensation includes:
-
Bonuses
-
Commissions
-
Incentive compensation
-
Variable compensation
-
Other eligible forms of earned income
Excess and High-Limit Disability Insurance may help provide additional protection when traditional coverage alone does not adequately address the individual's income exposure.
How Does Excess Disability Insurance Work With Traditional DI?
High-income disability insurance is often structured using multiple layers of coverage.
An individual may first obtain the maximum appropriate benefit available through traditional Individual Disability Insurance and/or employer-provided Group LTD. Specialized excess coverage may then be considered to provide additional protection above those existing benefits.
The amount of additional coverage available depends on the insured's income, existing disability benefits, occupation, financial documentation, and the underwriting and participation guidelines applicable to the coverage.
Who May Consider Excess & High-Limit Disability Insurance?
Excess or High-Limit Disability Insurance may be appropriate for individuals whose earned income exceeds the amount that can be adequately protected through traditional disability insurance.
This may include:
-
Highly compensated executives
-
Physicians and other medical specialists
-
Attorneys and other professionals
-
Business owners
-
Financial professionals
-
Entertainers
-
Professional athletes
-
Other high-income individuals with significant earned income
The need for excess coverage depends less on a specific occupation and more on the size of the gap between an individual's income and the amount already protected by existing disability coverage.
What Should Be Considered When Evaluating High-Limit Coverage?
Several factors may affect the availability and structure of excess disability insurance, including:
-
Earned income and compensation structure
-
Existing Individual Disability Insurance
-
Existing Group LTD benefits
-
Occupation and occupational duties
-
Amount of additional coverage requested
-
Medical history
-
Financial documentation
-
Benefit period
-
Definition of disability
-
Underwriting and participation requirements
Since high-limit cases often involve multiple policies or layers of coverage, understanding how the different benefits work together is an important part of the planning process.
Frequently Asked Questions
What is Excess Disability Insurance?
Excess Disability Insurance provides an additional layer of disability protection when an individual's income protection needs exceed the benefits available through traditional Individual DI, Group LTD, or other existing disability coverage.
Can Excess Disability Insurance be used with an existing Individual DI policy?
Yes, excess coverage is commonly considered after existing Individual DI, Group LTD, and other disability benefits are taken into account.
How much High-Limit Disability Insurance can someone purchase?
Available coverage depends on factors such as income, existing disability benefits, occupation, financial documentation, and applicable underwriting and participation guidelines.
Does Excess Disability Insurance use the same definition of disability as an existing policy?
Not always, excess and traditional disability insurance policies may contain different definitions, exclusions, benefit periods, and other provisions. Each contract should be evaluated independently.