Benefit amounts typically vary by the types of injury, product ranges, and the individual’s income.
“Like any policy, you get what you pay for,” Petersen says. “The benefits that are allowed by the underwriters are actually a reverse discrimination: If you took a $100,000 income-earner, they will probably get 65 percent of their income insured by the traditional marketplace, and they can maintain their lifestyle. However, if you took someone who has a $500,000 income, traditional underwriters place limits, and they may only be able to insure 50 percent of their income.”
In the latter instance, the lifestyle the person is accustomed to will not be met by the traditional disability benefits. Should disability insurance protect everyone’s lifestyle, or be a means to dropping people down to a different income level?
According to Petersen, disability coverage can actually be layered to protect the policyholder. While group and individual disability policies are most commonly prescribed to the public, the two may indeed be blended together. Sometimes the group coverage doesn’t cover a sufficient amount, or only covers base income.
In these situations, people may purchase individual policies to further protect themselves. However, it still may not offer sufficient coverage to those people who make more money or need stronger protection.
