Now that inflation is a topic of national discussion , clients may be more interested than ever in helping their top earners protect their incomes .
To compound the problem , let ’ s assume a period of inflation at 20 percent year over last . The impact of inflation on the GLTD reduces the real benefit by $ 1,000 , leaving the insured with the buying power of $ 4,000 a month versus $ 5,000 , or a 24 percent replacement ratio . Not many employees can fund their portfolios and cover monthly expenses when their cash flow falls to 24 percent .
In other areas of their portfolios , employees can respond to inflation by saving more , delaying goals or taking on more risk . Such options do not exist for those using GTLD because of a disruption in cash flow due to illness or injury — and most GLTD policies have no previsions in them to offset for inflation while on claim . And yet , the only common denominator of financial success is having enough cash flow to meet the funding schedule of their portfolios .
Now that inflation is a topic of national discussion , GLTD clients may be more interested than ever in helping their top earners protect their incomes . The best way to do just that is with Guaranteed Standard Issue Disability Income Insurance ( GSI ). With a GSI policy , employers can create an Executive Carve Out plan , also known as an IRS 162 Executive Bonus or double bonus .
An Executive Carve Out GSI plan allows the employer to add a layer of Individual Disability Insurance ( IDI ) on top of the GLTD for the highly compensated . The additional benefit amount varies by company , but can range from $ 1,000 a month to $ 15,000 or more . The combination of the GLTD and Executive Carve Out GSI is designed to get the replacement ratio as close to target as possible . This way , employees can continue funding their portfolios , no matter what other economic conditions they may be facing — like high inflation .
GSI is offered without medical or financial underwriting for individual employees , and the coverage is portable . In addition to an Executive Carve Out , employers can select various features and riders to meet the coverage needs of their workforces . Depending on how they are structured , GSI plans can provide a tax deduction to the employer .
We have the opportunity to help employers understand how the benefits they provide are impacted by the times , whether by inflation , low interest rates or a pandemic . We should be ready with solutions that help them adjust and move forward .
www . nailba . org 25