Case Study 5

Supplemental Executive Disability Plan

A public utility had implemented a number of Non-qualified executive benefits, including Stock Options, a SERP and an Income Deferral plan. They had neglected to realize that their long-term disability plan which covered 60% of pay, offset by social security, capped benefits at $10,000 per month and left the highly compensated executives with as little as 20% of their income replaced at their disability. Further, it insured only 60% of base salary pay and excluded all bonus compensation.

American Benefit Corporation designed and implemented a supplemental long-term disability plan, insuring 60% of the executive's total base and bonus compensation. Because the corporation paid the entire premium, the executives did not have to provide any medical evidence to the insurance company.