Table of Contents
Do not index
Do not index
In our modern world, one of the most crucial steps in ensuring financial security is purchasing disability insurance. This is especially true for professionals in high-income fields, such as attorneys. The lack of income due to an extended disability can have catastrophic financial implications.
Understanding the Need for Attorneys
Just like other professions, lawyers require disability insurance. It serves as an income replacement plan in case they become unable to work due to illness or injury. The cost of disability insurance for lawyers depends on various factors such as age, gender, health, and occupation. Attorneys, due to their profession, often qualify for some of the most favorable occupational classes, resulting in lower rates.
The average legal professional is a 46-year-old male, making up a little over 60% of the industry’s workforce, with an average annual salary of $151,638. Disability insurance allows attorneys to purchase premium coverage without breaking the bank. However, traditional disability insurance might not offer enough benefit amount to cover their income, especially for those with income exceeding the traditional disability insurance markets.
Disability Insurance Planning
Disability insurance planning is a complex process. It requires careful consideration of your needs and goals. The policy design for disability insurance for lawyers must comprise several key components to be meaningful. This includes ensuring 60-65% of your income is protected in case of illness or injury. The benefit length is also crucial. Even though the average claim lasts only a few years, as an attorney, your earning potential is high, hence a longer benefit period is recommended.
When looking for disability insurance, you need to consider several factors. First, the policy should cover an appropriate amount of income for a reasonable length. Second, it should feature an ‘Own Occupation’ definition of disability. This allows you to claim if you can no longer practice law.
Personal Income Protection
Personal income protection is one of the most popular coverage options. It protects an individual’s income that would be lost if they were unable to work due to an injury or illness. Hollowtree can offer monthly benefits ranging from $5,000 to more than $500,000 using our Lloyd’s market.
Buy/Sell Agreements
Buy/Sell Agreements protect the event one company owner suffers a career-ending disability. It provides the remaining owners with the capital to buy-out the disabled partner.
Key Person Insurance
Paid for and owned by the business, the policy benefits your business if a key employee becomes disabled due to an illness or injury. The business can use the benefits to cover temporary or replacement staffing, show financial stability, and offset lost revenue costs.
Business Overhead Coverage
Business Overhead Expense protects business owners from business expenses incurred during a disability—so they can keep the door open when they are too sick or hurt to work.
Contractual Obligation
Contractual obligation protection insures against the loss of an employee who has guaranteed financial compensation, whether physically able to work or not.
Loan Indemnification
Loan indemnification insures against the inability of a company to make payments on a loan in case key persons become disabled, impacting business performance.
Group vs. Individual
Lawyers have several options for purchasing long-term disability insurance. They can opt for coverage through employer-sponsored groups or plans, or buy individual disability insurance. Each option has its strengths and weaknesses, which must be carefully weighed before making a decision.
Conclusion
Disability insurance for attorneys is not just attainable but a necessary step in creating a comprehensive risk management strategy. Whether you are part of a corporation or large firm or you are self-employed, disability insurance can help secure your financial future. The right disability insurance policy is the one that fits your needs and goals and pays claims when you need it the most.
Written by
Cofounder Hollowtree Solutions & Marketplace. Executive MBA from Columbia Business School and London Business School, former attorney. Entrepreneur, investor, adviser.