Protecting Your Most Valuable Asset

Sally is a 45-year-old corporate executive with a spouse and 2 young children. She is the primary income source for the family and her earnings are also responsible for college & retirement savings. Recently one of Sally’s colleagues had an unfortunate accident where he fell from a ladder while taking down Christmas lights and suffered a significant head injury. Sally’s colleague was hospitalized and in a coma with an uncertain future. Though the company they work for has Group Long Term Disability (LTD) insurance, it was rumored that her colleague’s family was having difficulties.

This situation scared Sally and her spouse as they had developed a Financial Plan that included Life Insurance in case of untimely death but were unsure, they had appropriate Income Replacement in the event of a disabling Injury or Sickness.

Sally reached out to her Financial Professional for assistance with this risk analysis. Oppenheimer has a Strategic Alliance with Fortify Insurance Group that provides industry-leading specialization in Disability Income Insurance to help provide analysis and answer Sally’s questions. The Financial Professional scheduled a short initial call with the Fortify Consultant to introduce Sally and get basic information to create the analysis. With the assistance of the Fortify Consultant, Sally was able to secure the appropriate documentation from her Employer for a thorough review of the existing Group Long Term Disability (LTD) Insurance to determine if she had appropriate protection in place.

Upon receipt of the documentation, the Fortify Consultant created an analysis of the contractual language of the Group LTD coverage. Sally, her spouse and her Financial Professional were surprised to learn that the Group LTD they thought would protect 60% of her income protected less than 25% leaving them significantly exposed if Sally ever suffered an injury or sickness and could not work.

Sally has an income of $750k per year and her Group LTD policy is 60% of salary up to $15k per month. Because Sally pays the premium the benefits are non-taxable but because the benefit is capped at $15k this represents only a 24% income replacement. In addition, they learned that there are significant limitations with the contractual language of the Group LTD coverage. For instance, benefits are fully integrated with Social Security and Workers Compensation with strict requirements on how those benefits offset the Group LTD payments. Learning about limitations on portability, partial disability, deductible income, and specific exclusions for chronic fatigue, post viral symptoms, allergies, chronic pain disorders, etc. was also very eye opening.

Sally’s financial responsibilities between now and her age 60 (goal retirement age) are significant and this analysis helped her and the Financial Professional better understand how to protect income as an asset. Sally and her spouse agreed that the next 10-15 years of earnings are critical to their financial plan so they decided to secure Individual Disability Insurance to hedge against the risk of a disabling injury or sickness.

The Fortify consultant and their support team worked directly with Sally to secure all needed documents to complete the application and satisfy all underwriting requirements while keeping the Financial Professional posted on progress of the process with regular updates and a case management system.

Disability Income Insurance can be complicated because unlike Life Insurance it does not have one singular triggering event. Disability Insurance must account for all types of injury or sickness as well as different occupational duties.

Since Income is an essential asset for any client the idea of protecting Income in the event of a Disability is more important than ever. Studies show that mortality rates have plummeted yielding lower Term Life Insurance costs but the rate of disabling injury & sickness is a rising concern and worth addressing in your financial planning.