Disability Insurance for Executives: Classification Matters
This policy was initially published in 2013 and has been updated for 2023.
When it comes to disability insurance for executives, working with an experienced broker can make a significant difference. It all comes down to occupational class. An experienced broker can help guide you to determine the correct occupational class which is the biggest determinant of premium.
Today I had a call from a business owner (we will call him Mr. Richards) who ran several different companies in the field of real estate. He was frustrated with his financial planner who told him he needed disability insurance but the rates seemed extremely high. After a long conversation, I discovered that he ran several different real estate firms and various businesses. He had more than a dozen full time employees and had earned $300k for the last 5 years.
Since he was in the field of real estate, his financial planner (insurance agent) ran his quote as a real estate agent. After our long discussion, we determined that he fit the criteria as an executive. This resulted in reducing his premium by over 40%. Even though he works in the field of real estate, he qualifies as an executive because of his earning history and the fact that he has owned a business for a long period of time and has over 10 employees.
Mr. Richards was thrilled that he can adequately cover his income without paying a cost prohibitive premium.
A lot of business owners and professionals can be classified as executives. This can include engineers, media executives, architects, business owners and many more professionals. If you are able to bump your classification up to an executive, you may be able to reduce your premiums. Some companies require a certain amount of work experience (typically 5 years), an income minimum ($120k or more) and a certain number of employees in the business (10 or more).
