Part of our guide: Disability Income Insurance: Solutions, Tools and Guides →
Traditional disability carriers do a reasonable job replacing income for low- and middle-income earners, then quietly fall short the moment a client’s income crosses roughly $150,000. Here’s why that gap exists, and how to close it.
Key takeaways
- Percentage-based caps and flat dollar maximums leave high earners underinsured relative to their actual lifestyle needs.
- Stacking supplemental coverage on top of a traditional policy closes that gap without disrupting existing coverage.
- The underlying need doesn’t change with income level — only the size of the gap does.
Traditional disability carriers meet the 65% income-replacement target for most earners, then consistently fall short the moment a client’s income crosses roughly $150,000.
Why carriers underinsure high earners
Modern disability insurers are cautious, sometimes overly so, about accidentally over-insuring their clients, and that caution shows up most with highly compensated clients. In the past, the income replacement percentage was often left to a particular carrier underwriter’s subjective judgment. More recently, the Council for Disability Awareness has pushed to modernize that approach with a statistical analysis suggesting clients need to replace at least 65% of their income to maintain their standard of living through a disability.
Where the gap shows up
Traditional carriers often meet, and sometimes surpass, that 65% target for low- and middle-income earners. They consistently fall short for clients earning more than $150,000, where percentage-based caps and flat dollar maximums leave a widening gap between what the policy pays and what the client actually needs to sustain their lifestyle.
The solution: stacking supplemental coverage
Whether a client earns a modest income or a high one, the underlying need is the same: adequate income protection to sustain their or their family’s lifestyle during a period of non-productivity or severely diminished cash flow from a short- or long-term disability. For higher earners, stacking additional income protection on top of what traditional carriers provide turns “maintaining their current lifestyle through a disability” from a hope into something they can actually count on.
Contact your dedicated DI specialist today to learn more about how you can offer your clients a complete income protection plan, regardless of how high their income runs.
Frequently asked questions
Why do high-income earners often end up underinsured for disability?
Traditional DI carriers cap benefits well below what’s needed to replace a high earner’s actual income, largely out of caution about over-insuring. That leaves a gap between what a policy pays and the roughly 65% income replacement clients generally need.
How can advisors close the income protection gap for high-income clients?
By stacking supplemental disability coverage on top of a traditional carrier’s policy, specifically designed to cover the portion of income that falls outside standard carrier caps.
Reviewed by Tim Fuller on 2026-09-23
Tim Fuller
President, SRS Inc.
Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency) connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners — with the impaired-risk and complex-case expertise to place business other IMOs and BGAs turn away.
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