Real Estate Proves High-Limit Disability Is a Necessity
With a passion for marketing, design, and architecture, I constantly seek out new ideas, concepts, and designs. Designers shape our world and create the beauty that we all crave and admire. When the day is done, I will often unwind by reviewing architecture and interior design on one of my favorite apps – Zillow. Zillow is a wonderful real estate app which allows you to see photos of the homes that are currently for sale across the country.
Even though I favor contemporary styles, I love to see how designers blend architectural design with interior design. To find the more exquisite homes, I like to filter the results to only show houses well beyond my price range to see the custom built structures where the owners spared no expenses when they built.
On my most recent search, I found a beautiful French cottage style home in Santa Monica, California. The listing price for the property was $4,525,000, and it has an estimated mortgage of $25,419 per month. And that’s when it hit me; the estimated mortgage on this home is higher than the normal issue and participation limits for most traditional disability insurance carriers (normally $25,000/month). If the owner of this home became disabled, their entire disability insurance benefit would not even cover the mortgage!
After doing some additional research, most sources stated that your monthly mortgage payment should be no greater than 25-28% of you monthly income. Assuming this homeowner borrowed the maximum possible limit, we can then calculate the income requirement for this home to be around $1,250,000. At $25,000 per month this individual would have an income replacement of only 24%, when they should have $67,700 per month of disability insurance benefits.
I know what you are probably thinking – “how many people have a home worth more than $4.5 million dollars?” Well, right now in the Los Angeles area there are over 1,250 homes for sale that exceed that price. Keep in mind that these are only the homes currently for sale! There are thousands of additional homes in these areas and all of the homeowners need High-Limit Disability insurance.
Petersen International Underwriters offers High-Limit Disability insurance which layers on top of all existing disability insurance benefits to bring the income replacement up to the industry standard of 65%. Most consumers, and many insurance producers are not aware that High-Limit Disability insurance offers such large monthly benefits. Policies are often issued with more than $100,000/month of additional disability insurance protection.
Make sure you discuss disability insurance with your clients to ensure they know they can get 65% income replacement with the help of High-Limit Disability insurance. Disability insurance will rarely be a product that consumers ask for, so it is our job as insurance professionals to begin the discussion with our clients.
For more information about High-Limit Disability insurance or to request a quote, call our office today at (800) 345-8816.