Unique Needs for High Income Earners

It is easy to see how lifestyle and opportunity often trend with upward mobility and earning potential. Income protection is vital to sustain the household and provide the safety net to allow for consumption at your comfort level. Most group long term disability (LTD) plans cover 60% of your income to a stated monthly benefit limit. Typical group LTD benefits are $5,000/month of income to $20,000/month, and this benefit is typically taxable. Supplemental disability coverage fills the gap to minimize the impact.

W-2 versus 1099 Income Protection

High Income earners face coverage limits with group Long Term Disability (LTD), and often need to supplement with individual disability coverage to protect up to 70% of income. If your income fluctuates greatly, or is made up primarily of 1099 income, your group LTD coverage may be grossly inadequate. See this chart which shows the deficit of income protection for sales professionals with mostly 1099 income. Take an average of your past three years of income to set a target for income replacement.

Income Protection for Self-Employed

Setting up your own company includes implementing the traditional benefit plans offered by employers. After some form of commercial insurance, income protection / Company Benefits is at the top of the list. When thinking about transferring the risk of not being able to generate income to an insurance company, consider that the company wants to see some track record. This could be achieved through similarity of business activity from previous employment, and from sales agreements already in place.

Quick Highlights of Income Protection

*Not meant to be tax advice, please consult a tax advisor for details.


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Profit Sharing / Employee Retention

Profit Sharing / Employee Retention – developing a strategy to reward and retain key employees is vital to a company’s long-term growth and success. Life Insurance is a tool to reward key employees and show the commitment behind a profit-sharing strategy without giving up equity ownership.

DHill Philosophy: make a promise for tomorrow and for today while increasing value in the company assets.

Life Insurance

Life Insurance – provides a death benefit to replace future earning potential and to cover specific financial needs in the event of death. Life Insurance would aide in college funding, covering home expenses, loan repayment, new investment, estate planning, and to further philanthropic goals.

DHill Philosophy: ladder term life insurance policies to address a reducing need for income replacement.

Long Term Care Insurance

Long Term Care Insurance – covers the added cost of hiring a home healthcare aide or going into a nursing home or assisted living facility if custodial care is needed. Custodial care is assistance with day-to-day activities like bathing, dressing, and eating or supervision due to cognitive impairment.

DHill Philosophy: you will want some long-term care insurance or a hybrid long term care insurance policy.

Medicare Supplement

Medicare Supplement – health insurance for people aged 65 and older typically starts with Medicare. A Medicare Supplement policy covers the 20% of expenses Medicare doesn’t cover along with some of the deductibles included with Medicare; subject to plan selection. Prescription coverage is separate.

DHill Philosophy: Choose a Medicare Supplement policy with dental/vision that doesn’t re-price if you move.