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Individual Life Insurance and Carve-Outs for Disability Can Help Your Clients Retain Top Execs

When we write group benefits, including statutory disability and ancillary benefits, we often showcase how insurance coverage like enriched DBL in New York can aid in recruiting and retaining new employees and middle management. But are your clients focused on their high performers, top-tier employees – and themselves, as the company owners? Individual life insurance, fully funded by the employer, and executive carve-outs for disability insurance, can give employers and top executive the coverage they need.

Are you helping your clients explore ways you can enhance their insurance coverage to benefit company owners and high-performing executives?

Starting Salaries are Higher Than Ever

College graduates are earning more than previous generations, and the salaries they command in this tight labor market may not seem commensurate with their experience in any given professional field. The National Association of Colleges and Employers survey lists starting salaries for 2022 college graduates at roughly $55,000, which is 2.5% higher than last year.

Think about this: Undergrads are leaving school expecting a starting salary of $85,000. And if they are going into petroleum engineering or another technical field, that expectation would not be wrong. Technical majors average $80,000 annually, in their first year of work, while petroleum engineers can pull in close to $88,000, according to statistics from ThinkImpact.com.

While salaries for executives and upper management have also increased, these upper-level employees are not receiving raises that put them in line with new graduate salaries. ZipRecruiter.com reports that the average corporate executive salary for 2022 is $82,180 a year.

Look to Individual Life Insurance Coverage and Executive Carve-Outs to Level the Playing Field

Insurance coverage like individual life and disability carve-outs for top-level executives and company owners can aid in employee retention and deliver peace-of-mind to a company’s highest performers.

By reducing monetary worries and stress, the right employee benefits can help foster a positive company culture and a more productive workforce – starting from the top, down.

What Are Executive Carve-Outs for Life Insurance Coverage and Disability?

As most insurance brokers know, typical group life / AD&D coverage delivers a term life policy for up to $50,000, either funded by the employer, paid for by the employee with pre-tax dollars, or offered on a cost-shared basis. The coverage is usually not portable, which means the policy ends if the employee leaves or retires. Any additional coverage beyond the $50,000, funded by the employer, is typically considered a taxable benefit.

However, employers can opt for an EE (executive employee) carve-out to cover high performing individuals, c-suite executives, and owners or partners in a company. These EE carve-out policies are fully funded by the employer and may also generate tax incentives and deductions for the employer. Your clients may not be aware of how this incentive can help them and top-tier employees in their company, while reducing their tax liability.

A universal or whole-life carve-out is typically portable, which means executives hold the policy after the leave. The policy will accumulate cash value, which means it can be part of an executive’s retirement strategy.

Long-term disability carve-outs function in the same way, delivering enhanced, portable benefits to top executives.

Are Executive Carve-Outs Different from Buy-Up Coverage?

Another option to offer your clients is Buy-Up coverage. Like EE carve-outs, buy-up coverage for life insurance can be offered as an incentive to top performers or a reward to employees who have stayed with your company for years. It can help long-time employees feel valued amidst an incoming workforce that is demanding higher salaries and better benefits can past generations.

Buy-up coverage is offered on a voluntary basis, however, and doesn’t cost the employer any money out-of-pocket. It’s typically reserved for executives and high-performers, and can help incentivize longevity within a company.

How Enriched DBL Benefits the Highest Paid Employees in a Company

Finally, New York business owners should consider enriching DBL benefits up to 60% of an executive’s salary. Especially in the face of an uncertain investing environment, where many experts are predicting a bear market on the horizon, executives want to know they can tap into other resources to replace their income in an emergency.

Having enriched short-term disability coverage in the event of a non-work-related accident or illness means they can let their investments sit, rather than selling in a down market, when it may be harder to recoup losses later.

The DBL Center Can Help

Finding the right insurance coverage for your clients requires asking the right questions and honing in on the challenges they may face recruiting or retaining c-suite executives and top-level managers. What are the company executives’ biggest financial fears? How can the right insurance coverage give them peace-of-mind and potential tax savings?

The DBL Center team can work with you to pinpoint the insurance coverage your clients want, from universal life to enriched DBL. Plus, we have the technology, through our Broker Dashboard: Net Revenue Tracker, to help you track renewals and cancellations and stay on top of your clients’ evolving needs.  It’s never too late – or too early – to help your clients enhance coverage to retain employees and boost productivity.

 

 

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