By Stan & Shannah Compton

In these financial turbulent times it takes better focus and effort to keep one’s business running profitably due to all the challenges regarding the current financial crisis. It seems like every day there is a new twist and turn in the economy which has everyone guessing just what exactly lies ahead. For a business owner these challenges complicate the already challenging normal business activities.

When times are tough the worst thing that can happen to you is that you become sick or hurt to the point where you cannot work in your business and/or profession and do not have adequate replacement income.

Most professionals would agree that your income is your most valuable asset. You count on it every month to maintain your standard of living. What would happen to you or your family if your income suddenly and unexpectedly vanished?

You may have Group Long Term Disability through your business but what most people don’t realize is that it typically only replaces 60% of income and is taxable at claim time. To further complicate the situation Group Long Term Disability is usually subject to income limits, most commonly a $5,000.00 to $10,000.00 monthly benefit maximum.

For example:

Let’s take a look at Bob Smith. Mr. Smith is a highly paid executive at Firm X who earns $500,000 + a year.  He has a Group Long Term Disability plan that pays him 60% of income to a maximum of $10,000.00 a month and is taxable.

$500,000 a year X 60%= $25,000 a month. Because Bob’s policy only pays to a maximum of $10,000.00 a month that is the benefit he will receive.

Bob will really only receive 23.3% of his taxable income due to the group policy limitations.

Furthermore, if you were counting on additional Subchapter S distributions or bonus income it just may not be there when you need it the most.

We urge you to review your income replacement needs before the end of 2008. If your Group Long Term Disability plan will not meet your monthly needs in the event of a disability, it is important to develop a plan where you can receive up to 80% replacement of your earned income.

How is this accomplished?

A Supplemental Individual Disability policy is layered on top of your group long term disability and can offer benefits up to 80% of your monthly income. This can provide an enormous benefit and relief to you and your family.  Let’s look at Bob’s situation again:

$500,000 annual income= $10,000.00 a month taxable benefit through group long term disability policy

With a Supplemental Individual Disability policy layered on top:

$500,000 annual income=

$10,000.00 monthly taxable income through group LTD + another $15,000 of monthly taxable benefit from supplemental coverage.

Many business owners and professionals have been able to stop financial devastation of their assets because they had adequate replacement income when they were disabled. They have achieved this by layering a Supplemental Disability policy on top of their group benefits to provide added income in the event of a disability.

No one ever thinks they will be disabled, they always think it will happen to the next person. But the next person is thinking the same thing and sooner or later your number may come up. It doesn’t make sense to have your most valuable asset, your ability to earn a living, exposed and uninsured.

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