How GLTD can impact high-income earners
When your paycheck is your most valuable asset, you’d assume that your employer-provided disability insurance coverage is enough. For many professionals earning six or seven figures, however, the truth is quite different. Standard group long-term disability (GLTD) insurance plans may offer protection — but they often leave high-income earners more exposed than others.
Here’s why — and what those who rely on large incomes need to know.
The illusion of “60 percent of income”
Many employer GLTD plans advertise that they replace around 60 percent of your pre-disability income. On paper, that sounds solid. In reality, though, the benefit often stops at a flat monthly cap — and that cap hits high earners fast.
For example:
One plan might replace 60 percent of income, but only up to a $10,000 monthly benefit cap.
If you earn $300,000 a year (≈ $25,000/month), 60 percent would be $15,000/month — but the cap cuts you off at $10,000.
That leaves you with only 40 percent of your income replaced, not 60 percent.
What’s more, many plans exclude bonuses, commissions, restricted stock grants, and other incentive compensation. For high-income professionals, those non-salary elements can be 30–50 percent or more of their total compensation package — and they’re often not protected.
Why this matters
When your income may support a mortgage, private schooling, student loans, business obligations, or high living standards, a serious disability doesn’t just mean loss of salary — it means jeopardizing your lifestyle, your business, your retirement savings, or your family’s future. Without adequate coverage, you may need to access savings, liquidate investments, or alter your lifestyle significantly.
Consider this: The average length of MassMutual disability claims is more than 48 months. Now imagine a 48-month income replacement at a fraction of your salary — it can become a financial crisis.
How so?
Limitations on non-salary compensation can exclude large portions of actual income.
Lack of portability — GLTD plans usually stop if you change jobs.
In short: Without the right protection, a single disability can unravel years of planning — and put your lifestyle, business, and family at risk.
What high-income earners can do
If your annual income is over $200,000 or you’re in a profession (physician, dentist, attorney, executive, business owner) where variable compensation, equity, or business value is material, consider this action plan:
Review your GLTD plan’s monthly cap and compute the actual replacement percentage (include bonuses + equity).
Evaluate your portability — if you leave your employer, does coverage stay with you?
Consider layering individual disability insurance (IDI) or a guaranteed standard issue (GSI) executive carve-out (a type of employer-paid plan that offers individual disability insurance coverage to a select group of highly compensated employees) to fill the gap. Many experts agree that this is the missing piece.
Engage your benefits advisor or broker to show the hidden protection gaps: high income can equal high risk, but not high protection.
By recognizing the gap and tackling it proactively, you can help protect your income, lifestyle, and legacy.
Why employers should care
Employers benefit when their highly compensated talent is better protected. When leaders are financially secure, they’re more focused, less distracted, and less likely to leave for another employer offering better protection.
GLTD plans with lower caps and income exclusions for high earners can create a serious retention risk. When top talent isn’t fully protected, the impact goes beyond benefits — it can disrupt leadership continuity, slow strategic progress, and increase the burden on your organization to recruit and onboard replacements. Protecting key contributors with comprehensive coverage helps safeguard stability and maintain momentum.
The strategic imperative
Insufficient coverage for top performers isn’t just a benefits gap — it’s a business risk. Leadership continuity, strategic execution, and organizational stability depend on protecting key talent.
Disability income insurance should safeguard the earning power that drives success.
The takeaway
GLTD is not broken — it works for many employees. But it affects the high-income segment in different and predictable ways.
For executives, professionals, and business owners, the larger coverage gap is a silent threat. Recognizing it, educating stakeholders, and layering tailored solutions can be the only way to help reduce the gap. If you rely on your income, make sure that you can rely on your disability income insurance protection just the same.
By: Joe Pease
The information provided is not written or intended as specific tax or legal advice. MassMutual and its subsidiaries, its employees, and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own and do not necessarily represent the views of Massachusetts Mutual Life Insurance Company.
Disability income insurance policies issued by Massachusetts Mutual Life Insurance Company, Springfield MA, 01111-0001.
Provided by Adam Johnstone, a financial representative with Cadence Financial Management, courtesy of Massachusetts Mutual Life Insurance Company (MassMutual).
Disability income insurance policies issued by Massachusetts Mutual Life Insurance Company, Springfield MA, 01111-0001. MM202811-314261