PFS Income Protection Coverage
Lawyers’ Mutual has partnered with PFS Specialty Risk Underwriters to bring members exclusive access to discounted income protection (disability insurance).
Income protection, or disability insurance, is intended to replace a percentage of income lost if you are unable to work due to a serious accident or illness. Disability benefits can help maintain your standard of living and to provide for your family in the event of an unforeseen accident or illness.
What protection does PFS provide to individuals?
PFS addresses the financial gaps left by the capacity of domestic carriers for lawyers by developing flexible policies that protect their assets and earnings. Domestic carriers may only cover a small percentage of replacement income which may not adequately protect high net worth individuals. PFS can provide a variety of individual or group disability plans to create new, dynamic insurance solutions to protect their various financial interests.
Please note these specialized and unique risk solution insurance policies are not provided by Lawyers’ Mutual Insurance Company, but are being provided by Pro Financial Services, LLC (“PFS”), an approved coverholder and managing general underwriter of Lloyd’s of London.
Example One – Personal Income Protection
PFS was approached regarding a Managing Partner of a law firm in Texas. The proposed insured’s annual income was $200,000. The request was to design adequate disability insurance with the Managing Partner as the policy owner, insured, and beneficiary (i.e., the coverage was intended to replace the insured’s income that would be lost if they were unable to work due to disability). The final policy was structured to have a monthly benefit of $10,000. This benefit would begin after the insured had been disabled for ninety days and would continue for up to five years. At this point in time, if it was determined that the insured would never be able to return to their occupation, they would receive an additional lump sum benefit of $400,000 (normally used to purchase an annuity, for a total benefit of $1,000,000) Since this insured structured their policy so that the benefits would be income tax free, this coverage protected their income satisfactorily.
Example Two – Buy-Sell Agreements
Adequate life insurance is almost always addressed for corporations’ and partnerships’ buy-sell agreements; however, the disability side is often ignored. This is due to the fact that like benefit amounts were not considered available in the disability marketplace. With PFS’s product, this is no longer the case. PFS was recently requested to effect coverage on the seven Partners of a law firm. They had purchased life insurance of $3,000,000 each to protect their buy-sell agreements in the event of the death of one of the owners. PFS duplicated what was done with the life insurance by offering matching lump sum disability benefits. The policy would respond in the event one of the owners suffered a career-ending disability, giving the remaining owners the capital to buy-out the disabled partner.
Example Three – Key Person Agreements
PFS has a large law firm in the state of New York and their leading attorney produces $9,000,000 per annum in revenue to the firm through new and existing clients, with whom he has the relationships. The company was concerned that in the event he became disabled, they would lose this revenue. They purchased a policy which pays the company up to $7,200,000 per annum in the event that this attorney becomes disabled.