Disability Insurance for Securities Brokers

An underwriter documents a securities broker’s insurable income from what has already been earned and paid, not from projected or anticipated future commission. The Standard’s own instruction for a non-owner employee’s insurable income is to project the current annual salary and add year to date commission and bonus already earned and paid, and explicitly not to project commissions or bonuses forward. Ameritas requires two years of financial documentation for stock brokers, traders, and several other financial industry occupations before issuing a policy. Both rules point at the same underwriting reality. A carrier insures commission income a securities broker has already earned, W-2 compensation and 1099 commission income alike, and it does not insure commission a broker merely expects to earn.

Document Your Real Insurable Income

Occupation class sets the ceiling on how much monthly disability benefit a securities broker can be issued, and it moves with income and tenure differently at each of the five carriers. Three of the five publish more than two income tiers for this exact title, and the income and tenure bar required to reach the top class ranges from a two year track record at Ameritas and Principal to a five year minimum tenure requirement layered on top of a three year income bar at MassMutual. Guardian is the one outlier, assigning a flat class regardless of income. The table below compares the top class, the income and tenure required to reach it, and how each carrier names the title.

Occupation Class for Securities Brokers by Carrier

	Ameritas	Guardian	MassMutual	Principal	The Standard
Top class reachable for an office-duties securities broker	5A	Class 4 (flat, no income-tiered path)	5A/5	5A	5A (20% Preferred Occupation Discount eligible)
Income and tenure required to reach the top class	$150,000/yr for at least 2 years	No published income threshold; Class 4 is a flat assignment for office-duties stock or bond brokers	$250,000+/yr for at least 3 years, plus a minimum of 5 years in the business, not managing own account	$150,000/yr for at least 2 years, minimum 5 years in business	$200,000+/yr for each of the last 2 years
Middle tier, where a separate one is published	Not published; only a top tier and a general “Others” tier exist	Not applicable; a single flat class covers this title	Two middle tiers: $200,001 to $250,000/yr for 2 years reaches 5A; $150,000 to $200,000/yr for 2 years reaches 4A	$75,000/yr for at least 2 years, minimum 5 years in business, reaches 4A	$100,000+/yr for each of the last 2 years reaches 4A
Base or lowest tier if the income threshold is not met	4A (“Others”)	Not applicable; the flat Class 4 applies regardless of income	3A (“All others”)	3A (base occupation class)	3A (“Others”)
How the carrier names the title	“Brokers/Traders (bond, stock, commodity),” grouped with Fund Managers, Portfolio Managers, Financial Analysts, and Investment Bankers under Stocks and Securities	“Financial Industry – Broker – Stocks or Bonds (office duties only, not exchange floor),” with a separate “Stocks Brokers” entry among its general financial-industry eligibility list	“BROKER: Stock/bond/commodity broker or trader, investment or mortgage broker,” cross-referenced directly from a “STOCK BROKER” alphabetized entry	“Stockbroker,” cross-referenced from a “Stocks/bonds (not on floor of exchange)” entry under Sales occupations	“Broker” and “Stockbroker,” both named inside the Bank, Credit Union, Finance, Savings and Loan, Title and Escrow classification bucket

Source: producer-facing field underwriting and product guides held by Set for Life Insurance for Ameritas Life Insurance Corp., Berkshire Life Insurance Company of America underwriting for Guardian, Massachusetts Mutual Life Insurance Company, Principal Life Insurance Company, and Standard Insurance Company. These figures come from underwriting guidance, not policy contract language, so no policy form ID applies to this table. Guardian’s occupation class is stated on its own numeric scale and is not a direct equivalent to a lettered class at another carrier; a separate, narrower Guardian program chart (High Indemnity Program, PayGuard Plus) assigns a securities broker a different class, Class 3, for that add-on program’s own eligibility purposes only, and is not the general classification shown here. All five carriers exclude exchange-floor trading and, at most carriers, day trading or trading primarily for one’s own account, from standard coverage under this title; this exclusion applies uniformly across all five and is not shown as a row because it does not vary by carrier. The Standard’s classification bucket also includes Hedge Fund Manager and Investment Banker on the identical schedule, and Guardian’s own guide separately classifies Investment Analyst or Banker one class higher than this title; this table does not compare against either title. Class assignment is subject to underwriter review at the time of application and may vary by specific role, employer, and income documentation.

Find Your Occupation Class and Coverage Ceiling

No. All five carriers exclude a securities broker who trades primarily on an exchange floor, or who day trades for a personal account, from standard coverage under this title, and the exclusion holds regardless of income or occupation class. This is not a lower class or a higher premium, it is a flat decline of standard-issue coverage under the office-duties securities broker title. Principal’s own occupation-class table lists both floor trader and day trader as declined outright, and Guardian’s own guide limits its eligible title to office duties, not exchange floor duties. A securities broker whose role involves floor trading or proprietary day trading needs to confirm current eligibility directly with an underwriter before assuming standard-issue coverage applies to that role.

Confirm Eligibility for Your Trading Role

Residual disability coverage pays a partial benefit when a securities broker loses income to a disability without becoming totally unable to work, a claim shape commission-based income produces more often than an all-or-nothing loss. How much that check pays depends on which prior earnings window a carrier applies before the disability began. Ameritas averages the highest 12 or 24 month period and indexes it annually for inflation after the first year. Guardian averages the last 24 months or the best two of the last three years, whichever is greater. MassMutual and The Standard both average the last 24 months, and Principal averages only the last 12 months. Two securities brokers with an identical current year income loss can receive materially different residual checks depending on which of these windows applies.

How Disability Carriers Calculate Residual Benefits for Securities Brokers

	Ameritas Life Insurance Corp. 4501NC · Enhanced Residual Rider (AERES)	Guardian Berkshire Life Insurance Co. of America ICC16 18ID · Provider Choice + Enhanced Partial Rider	Lloyd’s Petersen International Underwriters PDI111521 · Optional Residual Rider	Mass Mutual Massachusetts Mutual Life Insurance Co. ICC15-XLIS-RC · Extended Partial Disability (EPR)	Principal Principal Life Insurance Company ICC22-800-IDI · Income Protector	The Standard Standard Insurance Company B180(7/17) · Platinum Advantage + Residual Riders
1 · Income Loss Threshold That Triggers Residual Benefits
Minimum income loss required % of prior earnings that must be lost before residual benefits begin	15% loss of monthly earnings (Specimen) One of the lowest thresholds available. Rider text states: loss must be “at least 15% of your prior monthly earnings” due to sickness or injury.	Loss of Income due to disability (Specimen) Guardian’s Enhanced Partial rider defines “Loss of Income” as the difference between Prior Income and Current Income attributable solely to the Injury or Sickness. No explicit percentage floor in the base rider, benefit scales proportionally with income loss. Must be Gainfully Employed.	Optional rider, threshold per rider terms (Specimen) Base Lloyd’s specimen (PDI111521) notes “Residual Disability is an optional benefit that only applies if the rider was purchased.” Rider text not included in this specimen. Typical Lloyd’s/PIU residual riders require income loss and inability to perform all material duties.	20–80% loss of Predisability Earnings (Standard) EPR benefit is payable when Monthly Earnings fall to 20%–80% of Predisability Earnings. Below 20% earnings remaining triggers full benefit. Above 80% earnings remaining, no EPR benefit is paid.	Loss of Earnings from own occupation (Specimen) Principal’s Residual Disability Benefit Rider requires a loss of Earnings due to Disability. The specimen confirms “Earnings” excludes unearned income. No explicit minimum percentage floor, benefit scales pro-rata with the earnings loss ratio.	20% loss of Predisability Earnings (Enhanced); 15–20% for Short-Term version (Specimen) Specimen lists Basic, Enhanced, and Short-Term Residual riders. Enhanced Residual: benefit payable when Monthly Earnings are 20%–80% of Predisability Earnings.
2 · Monthly Benefit Calculation Formula
Residual benefit formula How the monthly residual check is calculated	Residual Monthly Benefit = (Loss of Monthly Earnings / Prior Monthly Earnings) x Base Monthly Benefit (Specimen) First 6 months minimum: The greater of (a) 50% of base monthly benefit OR (b) the formula result. 75%+ loss rule: If loss exceeds 75% of prior monthly earnings, treated as 100% loss and full base benefit is paid. Prior earnings: Average of highest 12-month or 24-month period before disability, indexed annually for CPI-U after year 1.	Partial Disability Benefit = (Loss of Income / Prior Income) x Monthly Benefit (Specimen) Prior Income: Average monthly income for either (a) last 24 calendar months, or (b) the two calendar years with highest earnings in the three years before disability, whichever is greater. Current Income: All income for services during disability, excluding pre-disability earned-but-not-yet-received income. Full benefit floor: If loss of income is 100% or more of Prior Income, full monthly benefit is paid.	Proportional formula, rider required (Specimen) Rider language not included in this specimen. Lloyd’s/PIU residual riders typically use a proportional income-loss formula: (income loss / pre-disability income) x base benefit. Confirm with current rider filing.	EPR Benefit = [(Predisability Earnings – Monthly Earnings) / Predisability Earnings] x Monthly Benefit (Standard) Full benefit if earnings are less than 20% of predisability earnings. No benefit if earnings are greater than 80% of predisability earnings. Prior earnings: Average of the 24 months before disability began.	Residual Benefit = (Loss of Earnings / Prior Earnings) x Maximum Monthly Benefit (Standard) Prior Earnings: Average monthly Earnings for the 12 months before disability. Current Earnings: Earnings during the disability period, excludes passive/unearned income. Minimum benefit: Typically 50% of base benefit for first 6 months.	Residual Benefit = [(Predisability Earnings – Monthly Earnings) / Predisability Earnings] x Basic Monthly Benefit (Standard) Full benefit trigger: If Monthly Earnings are less than 20% of Predisability Earnings, full Basic Monthly Benefit is paid. Basic Residual Rider: Flat 50% of base benefit when qualifying criteria met. Enhanced Residual Rider: Proportional formula above; includes Recovery Benefit.
3 · Prior Total Disability Requirement, Can Residual Trigger Independently?
Independent trigger Does residual require a prior period of total disability, or can it trigger on its own?	Fully independent, no prior total disability required (Specimen) Ameritas AERES rider states benefits begin the later of: (1) the day after the end of the Elimination Period, OR (2) the day following a period of total disability for which benefits have been paid. Either path is valid. Days of both total and residual disability satisfy the elimination period.	Fully independent, no prior total disability required (Specimen) Guardian’s Enhanced Partial Disability Benefit Rider uses its own Elimination/Accumulation Period. The insured must satisfy the Accumulation Period but does not need to first be Totally Disabled. Residual days count toward satisfying the Elimination Period.	Rider-dependent, verify current rider (Specimen) Lloyd’s specimen confirms residual is an optional rider. The base policy elimination period can be satisfied by successive periods of Total Disability or Residual Disability, but rider must be reviewed for independence trigger language.	Fully independent, no prior total disability required (Standard) MassMutual’s EPR rider allows residual disability claims to trigger directly after the elimination period without a prior total disability period. Both total and partial disability days satisfy the elimination period.	Fully independent, no prior total disability required (Standard) Principal’s residual/partial disability rider triggers after the elimination period regardless of whether any total disability period occurred. The elimination period can be met by residual disability days alone.	Fully independent, no prior total disability required (Standard) Standard’s Enhanced Residual Disability Benefit Rider triggers after the Benefit Waiting Period is satisfied, independent of any total disability. Days of Disability during the Benefit Waiting Period need not be consecutive.
4 · Benefit Period for Residual Disability
Residual benefit period Maximum duration for which residual benefits can be paid	Remaining unused portion of the Total Disability Maximum Benefit Period (Specimen) The Residual Maximum Benefit Period equals the total unused portion of the maximum benefit period for total disability shown on the schedule. Combined total and residual payments cannot exceed this period. Typically to Age 65/67 when selected.	Same Benefit Period as Total Disability, to Age 65, 67, or 70 (Specimen) Benefit Periods of To Age 70/67/65 or 10/5/2 Years are available. The Enhanced Partial rider benefit period matches the policy benefit period. To Age 70 option available for physicians, distinctive among carriers.	Per Schedule of Benefits / rider terms (Specimen) The residual rider benefit period is set at time of issue and shown on the Schedule of Benefits (Section 1-D). Confirm with current rider.	To Age 65 (base); Extended to Age 65 via Maximum Benefit Period Endorsement (Specimen) Specimen shows coverage end date for Extended Partial Disability corresponding to the policy’s non-cancellable period to age 65. A separate Maximum Benefit Period Endorsement is available with its own premium schedule.	Same as base policy Maximum Benefit Period, 2 years, 5 years, To Age 65/67/70 (Specimen) Options include To Age 65, 67, and 70. Residual benefits run within this same period. To Age 70 available depending on occupation class.	Same as base policy Maximum Benefit Period, to Age 67 in this specimen (Specimen) Maximum Benefit Period schedule applies (e.g., if disability begins at 62: 60 months; at 63: 48 months). Enhanced Residual Disability Benefit Rider matches base benefit period.
5 · Recovery Benefit Provisions
Recovery benefit Protections after returning to work, continued payments if income remains depressed	Explicit Recovery Benefit provision (Specimen) Triggers after a disability benefit period ends if the insured has returned to work, is performing material duties 80% or more of prior time, and still has 15% or more loss of monthly earnings demonstrably caused by the prior disability. Duration: Continues up to the residual maximum benefit period.	Recovery Benefit, income-loss based, ongoing (Specimen) Benefits continue post-recovery as long as Loss of Income persists due to the disability. Because Guardian uses an income-loss formula, benefits naturally continue as long as Current Income remains below Prior Income due to the disabling condition. Prior Income protection: Uses the best 24-month or best-2-of-3-years average.	Recovery benefit per rider, verify current rider (Specimen) Lloyd’s base specimen does not contain recovery benefit language. Standard Lloyd’s/PIU residual riders may include recovery provisions, but this must be confirmed against the current executed rider.	Recovery Benefit included in EPR rider (Standard) After returning to full-time work following a disability for which EPR benefits were paid, if Monthly Earnings remain below Predisability Earnings due to the disability, a proportional recovery benefit continues. Duration: up to the remaining Maximum Benefit Period.	Recovery Benefit, proportional, ongoing post-return (Standard) Provides recovery benefits when an insured has returned to Full Time Work but Earnings remain below prior levels due to the disability. Benefit calculated using the same proportional formula.	Recovery Benefit included, Enhanced Residual Rider only (Specimen) The Basic Residual Rider does not include the Recovery Benefit, the Enhanced version is required. The base policy confirms premiums are waived while Recovery Benefits are payable. Short-Term Residual Rider: does not include recovery benefit.

Source: specimen policy contracts and riders held by Set for Life Insurance, Ameritas Life Insurance Corp. (form 4501NC, Enhanced Residual Rider, AERES), Berkshire Life Insurance Company of America underwriting for Guardian (form ICC16 18ID, Provider Choice, Enhanced Partial Disability Benefit Rider), Petersen International Underwriters for Lloyd’s of London (form PDI111521, Optional Residual Rider), Massachusetts Mutual Life Insurance Company (form ICC15-XLIS-RC, Radius Choice, Extended Partial Disability Rider, EPR), Principal Life Insurance Company (form ICC22-800-IDI, Income Protector), and Standard Insurance Company (form B180(7/17), Platinum Advantage, Enhanced Residual Disability Benefit Rider).

Compare Residual Benefit Formulas by Carrier

A securities broker already covered by a broker-dealer’s group long-term disability plan still needs individual disability insurance, because the two protect different things for commission-heavy income. Group long-term disability narrows the own-occupation definition to an any-occupation test after 24 months, caps the benefit at a flat dollar ceiling, and ends the moment employment does, since the Employee Retirement Income Security Act of 1974 makes it the employer’s plan, not the broker’s. An individual policy stays own-occupation for the full benefit period, sets its benefit by occupation class and earned income, and travels with the broker through every firm change. Group benefits are also taxable under Internal Revenue Code Section 104(a)(3) when the employer paid the premium, while an individually owned policy pays a tax-free benefit instead.

Group Long-Term Disability Versus an Individual Policy

Source: the Set for Life Insurance Wall Street Income Protection Report, “How a group disability benefit is calculated,” “Own-occupation coverage is usually time-limited,” “The maximum monthly benefit binds first,” “Whether the benefit is taxed,” and “What happens to the coverage when you leave” (group LTD findings across contracts examined for that report, none from a financial services employer directly, all underwritten by carriers active in this sector); Principal Life Insurance Company’s Disability Product Guide, form ICC22-800-IDI, Income Protector (individual maximum monthly benefit example); and Internal Revenue Code Section 104(a)(3) (taxability). The individual-policy maximum monthly benefit shown is Principal’s own published limit and is not asserted as a figure common to all five carriers SFL represents. Group plan terms vary by employer and are shown as the common structure, not a specific plan’s terms. Terms shown are subject to the individual employer’s plan documents and underwriter review at the time of application.

Request a Coverage Comparison

None of the five carrier guides reviewed for this page addresses trailing commissions received after a securities broker has fully left the industry as a distinct income category. General underwriting practice ties insurable income to compensation earned from actively performing an occupation’s duties, and residual or partial disability benefits specifically require the insured to be gainfully employed at the time of claim, not merely receiving payments tied to past work. A securities broker still actively working who continues to earn trailing commissions on an existing book of business is documenting ordinary earned income for underwriting purposes. Trailing income received after leaving the occupation entirely is a scenario worth confirming directly with an underwriter before assuming it counts toward a new application or a residual claim.

Ask an Underwriter About Trailing Income

A securities broker moving from one broker-dealer to another files a Form U4 transfer with FINRA, but a personally owned individual disability policy is not tied to the Form U4 filing, the broker-dealer, or any specific firm. The U4 transfer changes which firm sponsors the broker’s securities registration, and it has no effect on a disability policy the broker owns personally and pays for directly. What can change at a U4 transfer is the compensation structure itself, a new payout grid or a new draw against future production at the new firm, which affects how income is documented if the broker later increases coverage, not whether the coverage already in force stays active.

Keep Your Coverage Through a U4 Transfer

None of the five carrier guides reviewed for this page addresses a FINRA suspension or a bar from the industry as a distinct underwriting scenario. A carrier’s occupation-class and own-occupation provisions are built around a securities broker actively performing the material and substantial duties of the occupation, and a regulatory suspension or bar removes the legal ability to perform those duties for reasons unrelated to sickness or injury, a different situation than the disability risk a policy is designed to cover. A securities broker facing a FINRA disciplinary matter should confirm directly with an underwriter, for a new application, or with the policy’s own claims department, for coverage already in force, how the carrier treats a regulatory suspension, since none of this page’s specimen sources states a rule for it.

Talk to an Underwriter About Your Situation

Individual disability insurance replaces a securities broker’s personal income, not the value of a book of business built over a career. A book of business, the ongoing client relationships and trailing commission stream a broker has developed, is a business asset that can be sold, transferred to another representative, or wound down when a broker changes firms or leaves the industry, a different kind of loss than personal income lost to disability. A securities broker who wants to protect the value of a book of business itself against disability, rather than personal income, needs a separate business continuation product, not an individual income replacement policy.

Protect Your Personal Income Directly

A securities broker’s errors and omissions insurance, or a broker-dealer’s firm-level professional liability coverage, protects against a client’s claim of negligence or a regulatory complaint. Neither one pays the broker’s own income when a sickness or injury prevents the broker from working. Disability insurance answers the opposite side of that pairing, errors and omissions coverage responds to what a client alleges the broker did wrong, and disability insurance responds to what a sickness or injury does to the broker’s own ability to work. A securities broker who carries only errors and omissions or firm liability coverage has no personal income protection in place at all.

Get the Income Protection E&O Does Not Provide

A Future Increase Option rider lets a securities broker raise the monthly disability benefit at set future dates or income milestones without new medical underwriting, evaluated only on updated income when the option is exercised. This matters for a career built on commission income, since a broker’s earnings can grow well beyond what an entry-level policy covers within a few years of building a book of business. Locking in a policy while young and healthy secures the lowest available premium for the base coverage, and the rider preserves the ability to add coverage later as commission income rises. A medical event after the original policy is issued does not affect eligibility to exercise the rider.

Preserve Your Right to Increase Coverage Later

A non-cancellable and guaranteed renewable policy locks in the premium and the terms of coverage for the life of the contract, holding both fixed regardless of what happens to a securities broker’s income or health after the policy is issued. This matters more for commission-based income than for a fixed salary, because a slow quarter in trading volume or a market downturn that depresses production has no bearing on a policy already in force. A guaranteed renewable policy without the non-cancellable feature still guarantees renewal, but the carrier retains the right to raise premiums across an entire class of policyholders. A non-cancellable policy removes that risk entirely, holding the rate and the terms fixed from issue.

Lock In Your Terms for the Long Term

A top-producing securities broker who reaches a carrier’s top standard-issue and participation limit can add coverage above that ceiling through Lloyd’s of London, placed through Petersen International Underwriters, as an excess layer. This high-limit coverage supplements a standard-issue policy already in force rather than replacing it, and it applies specifically once total compensation has outgrown what the five standard-issue carriers will underwrite individually. Confirming the current standard-issue ceiling at each of the five carriers is the first step before adding an excess layer through Lloyd’s.

Ask About Coverage Above Standard Limits

A multi-life discount reduces the individual disability insurance premium when several securities brokers at the same broker-dealer, wirehouse branch, or advisory team apply for coverage together through the same carrier. A brokerage with several registered representatives on staff can negotiate this discount even though each broker’s policy is individually owned and individually underwritten. The discount holds for the life of each policy rather than as a temporary introductory rate, and it applies alongside whatever underwriting result each individual broker receives. A securities broker at a firm that has not already arranged a multi-life discount can ask the firm’s benefits contact whether one is available before applying individually.

Check Your Multi-Life Discount Eligibility

Elimination period options vary by carrier and by the benefit period you select. Ameritas offers the widest range, from 30 to 730 days, and Guardian offers 30 to 720 days, both with some restrictions tied to benefit period and state. Principal, The Standard, and MassMutual all offer a choice of 60, 90, 180, or 365 days. A shorter elimination period costs more in premium but pays sooner, so the right choice generally comes down to how much cash reserve you have to cover a short gap before benefits begin.

Compare Elimination Period Options

Most individual disability policies offer a Cost of Living Adjustment rider that increases your monthly benefit each year you remain on claim, tied to the Consumer Price Index. Guardian, Ameritas, Principal, and The Standard all let you choose a 3 percent or 6 percent maximum increase when you buy the policy. MassMutual’s rider applies a fixed 3 percent compound increase with no higher option. Most carriers require a full year of disability before the adjustments begin.

Ask About Cost of Living Adjustment Riders

A securities broker recruited by a wirehouse or broker-dealer is often paid a large signing or retention package structured as a multi-year deferred cash award or a forgivable note rather than upfront commission, vesting or forgiving in installments over several years. A standard employer group long-term disability plan defines covered earnings as base salary or current commission production, and a deferred or unvested retention award sits entirely outside that definition. A broker disabled before a retention package finishes vesting can lose the ability to generate new commission and the unvested balance of that package at the same time, with the group plan replacing neither. Individual disability insurance is underwritten against a broker’s documented trailing income at the time of application, a figure that does not depend on whether a specific deferred tranche has vested, so it protects the broker’s ability to keep earning independent of the retention package’s own schedule.

Protect Income the Retention Package Doesn’t Cover