The Disability Gap: Why High Earners Are More Exposed Than They Think

By Kevin Bewley and Otto Dittrich

Disability insurance has a few common misconceptions: most people assume their disability coverage is handled, that it comes with their job’s benefit package, and that it rarely requires a second thought. For the majority of working Americans, that usually is enough protection. A standard group long-term disability plan covers around 60% of pre-disability earnings, which for someone earning $60,000 or $80,000 a year, that replacement rate does what it's supposed to do.

However, for the company’s top earners, the same plan that works for most employees can leave them in a vulnerable position.

Group plans tend to cap monthly benefits somewhere around $10,000 to $15,000 per month, regardless of what you earn. For someone making $300,000, $500,000, or more, that cap means the plan replaces only a fraction of their income.

Most people in that position have no idea the gap exists until they need it. 

For those individuals, the gap between what they earn and what their coverage lacks isn't a minor inconvenience; it's the kind of shortfall that forces families to make decisions they never imagined having to make.

Lifestyle Creep

The gap can be so damaging because as income grows, lifestyle tends to grow with it. For higher income earners, that might include a bigger home, private school tuition, nicer vacations, and larger retirement contributions. But these choices come with fixed obligations, and fixed obligations don't pause because a disability event occurs.

Plenty of people earning $100,000 a year could adapt just fine to a $1,000,000 salary, but very few people earning $1,000,000 a year could comfortably live on $100,000.

It Happens More Than People Think

The Social Security Administration estimates that about one in four of today's 20 year old's will experience a disabling condition before reaching retirement age. For a high earner in their late 30s or 40s, this deserves the same weight as every other piece of a financial plan, but it consistently gets the least.

The Math, and Why It's Actually Worse

Consider a 45-year-old earning $500,000. With roughly 20 years left in their career, that's $10 million in future earnings. Their group long-term disability (LTD) pays $10,000 a month, or $120,000 a year. The gap is $380,000 annually. Over a multi-year disability, that's the mortgage, the college funds, and the retirement contributions that never get made.

The gap itself doesn’t stop there, when an employer pays the LTD premium, the benefit is typically taxable income at claim time. Depending on the overall tax picture, including a spouse's income or other sources, a meaningful portion of that $10,000 monthly check goes to taxes. After federal and state taxes, take-home income is realistically closer to $7,500 to $8,000 a month. The real annual gap for a $500,000 earner is likely north of $400,000, and the effective replacement ratio tends to be worse than it looks on paper.

Most people just see the monthly maximum on their benefits summary and assume that's what they'd receive.

The Window to Act Is Smaller Than You Think

The opportunity for high earners to buy individual disability coverage is fleeting due to two big stipulations. Individual disability insurance is one of the most aggressively underwritten products in the industry. The rule of thumb is that out of every four applicants, two get approved as applied, one gets declined outright, and one gets approved with exclusions or a rate increase that compromises the policy's value. Prior back injuries, a history of anxiety or depression, or a cardiovascular flag, are exactly the issues that can accumulate quietly over years of high stress work.

The second issue is job changes. People move companies, leave partnerships, and start their own practices all the time, and group LTD does not follow them out the door. For someone without individual coverage already in place, that transition does not just create a gap. It takes someone who had at least partial protection down to zero, at an age when buying individual coverage is more expensive and a clean underwriting result is harder to come by.

What Employers Can Do That Individuals Often Can't

When a company sponsors a group executive disability plan, coverage is often offered on a guaranteed issue basis. No medical underwriting, no exams, no health history review. In many cases, enrollment is census-based, meaning eligible employees are covered automatically without having to apply individually or show evidence of prior coverage. For anyone who might not qualify on their own, and that is a bigger group than most people realize, this may be the only path to adequate protection.

According to NFP's 2025 U.S. Executive Compensation and Benefits Trend Report, only 26% of employers currently offer supplemental executive disability coverage. For organizations competing to attract and retain high performers, that represents both an unaddressed risk and a real differentiator.

What the Difference Actually Looks Like

A $500,000 earner on group LTD alone gets $120,000 a year on paper, and less after taxes. With a well-structured executive disability program in place, and with the employee paying the premium so benefits are received tax-free, that number can climb to $300,000 or more. Often being the difference between a family that keeps its footing and one that starts coming apart.

The Conversation Worth Having Now

Whether you are a high earner evaluating your own coverage or a decision maker responsible for benefits strategy, the question is not just whether disability coverage exists. It is whether it will actually be enough when it matters most. The details that determine that answer are easy to overlook and often misunderstood.

If anything in this article raised a question about your own situation, reach out to NFP Insurance Solutions directly and we will take a close look at where you stand. 

The best time to have this conversation is always earlier than people think.

About the Authors

Kevin Bewley is a Case Design / Multi-Life Specialist at NFP Insurance Solutions. He joined our team in 2024 with over 16 years of experience in the life insurance industry. As both an advisor and case designer, he crafts personalized life insurance solutions tailored to our clients' specific needs. His primary focuses are on providing risk management and estate planning solutions to individuals and families, as well as executive benefits designed to attract, reward and retain key talent.

Otto Dittrich is a Case Design, Product, and Service Specialist at NFP Insurance Solutions, where he partners with advisors to develop tailored strategies that help clients achieve their financial goals. With four years of combined experience in wealth management and real estate, Otto brings a well-rounded perspective to financial planning, blending investment insight, insurance expertise, and a client-first approach.