Monday, March 3, 2008

Executive Long - Term Disability

Many companies, and their executives, have come to realize that Group Long Term Disability Plans no longer meet the needs of the executives and other key personnel in the organization. An assessment of your current plan may lead to the conclusion that revisions are necessary in order to ensure benefit levels are adequate and appropriate, and that contractual provisions are in-line with your objectives. Why do Group Long-Term Disability (LTD) Plans Fail to Meet the Needs of Executives? Reverse discrimination results from income limitations Benefit maximum (cap) Inability to insure retirement plan contributions Inability to insure incentive-based compensation Inherent instability of group plans can result in unexpected changes in cost and coverage provided There are solutions available to assist the organization in retaining and providing incentives for their executives. The prevalence of "combination" plans is growing, particularly as increases in executive and key personnel incomes have exceeded the benefit limits provided through a group only approach. A combination plan takes advantage of both group and individual disability products working in tandem. Some common Executive LTD objectives that can often be obtained through this strategy include: Providing comprehensive and coordinated benefits to executives and key personnel Optimize benefits and costs using the most effective combination of group and individual products Maximize target benefit level of "total" compensation - often to $30,000 per month Guarantee policy provisions and benefit levels over time Provide rate stability Minimize impact of group LTD claims Provide guaranteed cost structure through individual policies Facilitate acquisition of comprehensive individual policies using the highest level of available guarantee-issue coverage Create enhanced return to work benefits during partial disability and/or following full recovery Provide enhanced benefits for catastrophic loss

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