Everyone who tries to sell income protection has clients like Susan.

Susan has been working for the same employers for years, and she’s satisfied with her employer’s group disability insurance program. Why should she worry about protecting her income when there are so many vacations to to the Bahamas to take and so many cups of gourmet coffee to drink?

The best way to get through to Susan is to show her the math.

Assume her employer’s group long-term disability (LTD) plan pays a benefit equal to 60% of income up to a maximum of $5,000.

“Mary,” the woman at the front desk, makes $30,000 a year.

If Mary becomes disabled, she gets $18,000 per year in taxable benefits. That would take her to around $15,000 per year –50% of her income.

Susan, the executive vice president of marketing, makes $200,000 per year.

Susan gets disabled. Most people think she will get $120,000 per year.

Wrong. The maximum benefit is $5,000 per month, or $60,000 per year, and those payments will be taxed.

Let’s say Susan gets about $45,000 per year after taxes. She is now at 23% of her income.

Do you think her lifestyle changes?

Every company that has high-income employees has employees who face reverse discrimination because of the nature of group LTD plans.

Every producer has clients like this. Very few do anything about it. One way to do something about it is to show the client this example of how the group LTD policy really works.