Reeske

Tips: Employer-sponsored long-term disability (LTD) insurance (at work), also known as group disability insurance, is a great benefit, but it has limitations that many are unaware of:

1. Many group LTD plans cap their benefits, and most limit benefits to 60%-70% of after-tax income, NOT including incentive compensation. As a result, the high-income earners in a company have a lower percentage of their income insured than those with lower income or low incentive compensations.

2. The definitions of disability in Group LTD policies are typically more restrictive than those in individual disability policies. What it means is that they can pay less benefit under the same claims scenario than an individual disability insurance policy.

3. Most Group LTD Benefits are reduced by Social Security and Workers’ Compensation.

4. In most cases, the group LTD benefit is taxable. Use this rule of thumb: if your employer paid the premiums, the disability income is taxable to you.

5. Group LTD is generally not portable. What does it mean? If you leave your company, you lose your coverage.

Findings: We ran a survey of 50 W2 employees of Fortune 500 companies; we found that the actual income replacement % is around 35%-45% instead of 60% considering the cap, max benefit %, salary base, and tax implications.

Group LTD is an inexpensive way to provide benefits. However, because of the limitations discussed above, you should consider supplementing your group coverage with more comprehensive individual disability products.

Learn more about the benefits of an individual disability insurance plan:
https://www.reeske.com/blog/understanding-how-disability-insurance-protects-your-income

Want to get a quick & accurate estimate of the amount of life insurance coverage you need to take care of your loved ones without talking to an agent?

Use our FREE life insurance needs calculator to get your personalized coverage: https://www.reeske.com/onboarding/questionnaire

Tips: Employer-sponsored life insurance (at work) is a great benefit, but it may not be enough to protect your family.

If it isn’t enough to cover the mortgage, childcare, medical expenses, and ongoing bills, you may need an individual (personal) policy to make sure your loved ones have sufficient coverage.

So, what is enough coverage for you?

It depends. Rule of thumb such as 10-13X your salary is a good start. However, such rules overestimate your coverage by as high as 50%.

Based on your household finance and personal situation, we can help you understand your personalized future coverage need in 5 min for free, no more rule of thumb, no more fluff.

Give it a shot: https://www.reeske.com/onboarding