Disability insurance series, Pt. 4: Corporate disability insurance
By Steve Savant
Corporate disability insurance: A tribute to Disability Insurance Month in May with special guest Marcy Pruitt, nationally recognized disability insurance expert, educator and workshop trainer.
The corporate market place is a great business environment for tax deductible disability insurance for paycheck insurance. But it’s much more than that. Paycheck protection is the consumer street language used for disability insurance. One in 3 Americans will be disabled for 90 days or linger in their working career.
The Americans Disability Act is a wealth of information on disability.
The blue collar market is distinctive in comparison to the white collar market for disability insurance. DI or paycheck protection is the forgotten insurance, the most undersold personal insurance in America.
The qualified sick pay plan is a strategic compliance item that can open the conversation for DI. The basic issue is, does the employer have a written plan for any employee covered by disability insurance? An example of the consequences of an undocumented plan is the Chesham Ice Cream, where the employer didn’t have a plan and they deducted the premiums and later filed a tax free claim. So documentation is necessary to avoid an ad hoc payment.
Three or more employees can reduce the cost of DI through billing discounts and underwriting concessions. DI for key executives can supplement established group short and long term DI. Unisex rates are advantageous for a large female employee population.
DI planning applications: personal income protection, business overhead expense, buy/sell, key person, retirement funding protection and to secure loans. Tax deductions may create taxable events. Consult your tax or legal advisor. Breaking down the premium cost of DI, the rule of thumb is insuring 60 percent of my net after tax income for about 2.5 percent. DI can cover personal income, business overhead, buy/sell agreements, retirement protection for qualified plans, key person and loan indemnification.