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3 Important Insurance Considerations for High-Income Earners
It's important for every solid financial plan to protect against the unexpected. For high-income earners—who typically have above-average expenses—it can be even more essential to secure their income against death, disability and disaster.
Below, we'll look at three different types of insurance coverage that you might use to help financially protect you and your family as a high-earner:
- Long-Term Disability Insurance:
- The first and often most crucial insurance consideration is long-term disability insurance (LTDI). LTDI protects individuals if they become sick or disabled, and can no longer work, by paying them a percentage of their salary until a certain age. This is typically viewed as the most important insurance to consider because individuals are three and a half times more likely to become disabled during their career than they are to die.
- First, it comes with many different attachments or options, known as “riders.” When purchasing LTDI, high-income earners may want to ensure that their policy has an “own-occupation” rider. Own-occupation means that they’ll qualify for benefits if they are no longer able to do the job they have been trained to do because of a disability or illness.
- Life Insurance:
- For high-income earners, it’s essential to understand how life insurance can fit into an overall financial plan because it would ultimately replace their income if they were to pass away. Life insurance can be even more critical when a high-income earner has dependents counting on them to provide income.
- Term Life Insurance-For many high-income earners, basic term life insurance may be a good option due to its low cost and low complexity. It offers a straightforward approach to providing income after death. It is a matter of purchasing the amount of coverage needed for a set period of time (the term), which typically ranges from 20-25 years.
- Permanent Life Insurance- Another option is to purchase permanent life insurance, which can be more costly but comes with some added features that may be a good fit for a high-income earner.
- Umbrella Insurance:
- This is often referred to as property and casualty insurance (P&C), is meant to act as a catch-all, or umbrella protection. It’s vital for high-income earners since, they can be more vulnerable to lawsuits as they typically have the means to pay-out larger sums in the event of an accident.
As a high-income earner, it’s essential to know how to protect your high-income from death, disability, and disaster. By focusing on the three insurance considerations outlined in this article, high-income earners can work towards creating a sense of security, knowing that they are protected from these unforeseen events.
For more information on insurance considerations for high earners, read here.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) provides eligible covered members and their eligible dependents the opportunity to temporarily extend their health coverage when coverage under the health plan would otherwise end due to certain qualifying event. For more information, click here.
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