Disability Income Protection
Solutions for the Highly Compensated
Your Firm’s Most Valuable Asset
Current workforce trends make providing competitive benefit strategies that offer value for both the firm and the firm’s partners and attorneys especially challenging.
- Attorneys are extending their careers, thereby extending the need for adequate income protection.
- Medical advances are extending life expectancy, resulting in a lifespan that is more likely to include disability rather than an earlier death.
- Attorneys must plan for and fund their own retirement.
- As a result, attorneys are under greater pressure to maintain uninterrupted income during working years. Even highly compensated attorneys depend on their ability to work and earn income in order to maintain their lifestyle and accumulate retirement funds.
- An employer-sponsored group Long Term Disability (LTD) plan can impart a false sense of security for many attorneys and make maintaining their normal lifestyles impossible if they were to become disabled and unable to work. Some possible disadvantages and undesirable consequences of an employer-sponsored LTD for the highly compensated are described below.
Unintended Impacts On Partner Attorneys
Reverse Discrimination -Monthly benefit maximums (caps) on employer-sponsored LTD plans subject the highly compensated to lower percentages of earnings actually replaced. LTD plans replacing 60% of earnings to $10,000 per month would provide an attorney earning $400,000 per year only 30% of income, while an entry-level associate would receive 60%.
Excludes Significant Forms of Compensation – Variable performance pay, retirement contributions and other incentives may be an important component of a partner’s compensation and often used to meet financial obligations. However, many group LTD plans cover only a portion of base salary and exclude these other forms of income.
Insufficient Benefits – Most LTD plans do not provide sufficient coverage for “catastrophic disabilities” or disabilities that require expensive custodial services.
Insufficient Retirement Accumulation – Higher income partners need to save more for retirement and an extended disability would severely restrict their ability to continue funding for retirement.
Retirement Plan Contributions – Qualified and nonqualified retirement contributions and employer matches discontinue during a long-term disability, resulting in investment earnings and capital loss to the retirement plan that could be disastrous.
Restrictive Contract Language and No Ownership of Coverage-Group insurance coverage provided by an employer is generally not portable.
Disability Income Solutions
Innovative New Products – Effectively meet the income replacement and asset protection needs of attorneys in a coordinated fashion.
Higher Coverage Limits – Total coverage can approach or exceed $50,000 per month.
Enhanced Guaranteed Standard Issue – (GSI) Programs
Provide easier access to coverage without the usual evidence of insurability requirements.
Retirement Accumulation as an Executive Benefit – Partner attorneys are concerned about accumulating enough assets to generate adequate retirement income.
Supplemental Medical Benefits – Individual disability policies can be designed to include additional funds for catastrophic disabilities requiring long-term care and also provide lump-sum payments for severe disabilities.
Benefits of an Income Protection Plan
- Reduce “reverse discrimination” resulting from uninsured forms of compensation and inadequate plan maximums
- Provide comprehensive contractual definitions that “match up” with the needs of attorneys
Integrated Lifestyle and Retirement Protection
Innovative supplemental income protection policies offer flexible solutions to address multiple risks associated with longterm disabilities.