Why Offer Supplemental Disability Insurance (IDI)?

Most employers offer Group Long Term Disability (LTD) insurance to protect their employees’ incomes and lifestyles.

While Group LTD provides a good foundation for protecting the income of most employees, highly compensated employees often remain underinsured, and financially exposed in the event of a disability. Why?

• Monthly LTD benefit maximum limits coverage

• LTD does not typically protect bonus compensation.

• Employer-paid LTD is taxable at time of claim.

• Owners/Partners: LTD may not protect W-2 or K-1 income.

How Does a Supplemental Disability Insurance (IDI) Plan Work?

Supplemental IDI provides an additional monthly benefit, layered on top of the Group LTD benefit. This benefit is offered to employees on a Guarantee Issue (GI) basis, like Group LTD. Coverage is typically paid for by the Employer and generally costs less than 1% of the covered employees’ combined payroll. For larger Employers, coverage can be offered on a payroll deduct basis. In addition:

• IDI premiums are deeply discounted, providing “group-like” rates.

• Unlike Group LTD rates, Supplemental IDI rates are fixed, locking in at purchase age.

• IDI coverage is fully portable, at the same rate.

The “Benefits” of Supplemental IDI

Supplemental IDI plans can further enhance your top performers’ benefit package, by:

• Improving income protection with a higher aggregate benefit amount

• Providing up to 80% income replacement

• Protecting bonus compensation, and other forms of income such as K-1 income

• Meeting the requirements of an Executive’s Employment Agreement, which often requires 60%+ income protection.

  • Note that LTD alone, often can’t meet this requirement due to monthly benefit maximums.

Types of Companies are Good Candidates for Supplemental IDI Coverage

Companies in certain industries tend to be more likely buyers of Supplemental IDI, such as law firms, physician groups, financial institutions, professional firms, pharmaceutical and manufacturing companies. However, most companies with 5 or more employees earning over $100,000 are strong candidates. While over 50% of Fortune 500 Companies offer Supplemental IDI, smaller companies also offer Supplemental IDI. In fact, 75% of Supplemental IDI plans sold cover 7-10 highly compensated employees.

Navis Benefits Group, LLC, is a leading provider of Supplemental Disability Insurance programs. With over 29 years of experience specializing in Supplemental IDI programs, Navis can help you design, install, and administer an effective and affordable Supplemental IDI plan.