Jacob, an executive at Amazon, earned $2.2 M per year, primarily in unvested stock options worth approximately $11 M. He and his wife, Lynne, were raising three young children. As Americans are much more likely to become disabled than die1 , Jacob was worried that he may become disabled and stop working before his stock options vested, which would prevent him from using them. Maintaining his family’s lifestyle depended on these stock options vesting.
Maxing out Jacob’s disability insurance would yield less than $500,000 per year, which was well below the family’s spending. This created a massive worry that even with insurance, they would be unable to maintain their lifestyle if Jacob became disabled. If they were to obtain insurance that would cover their spending, the premiums would skyrocket.
What would enable Jacob to get the coverage that he needed? Would their family have to reduce their expenses? Was there another insurance option that would better fit Jacob’s needs?
Jacob followed their advisor’s recommendations at BWA and took out the insurance on the stock options themselves instead of using traditional disability insurance. This strategy curated by an advisor at BWA afforded Jacob greater coverage at lower premiums than traditional insurance strategies. BWA’s plan better protected his family from his potential disability and job loss.
When at least one household member has a substantial salary largely tied up in stock options, it’s common for anxieties about disability to rise. Households that are accustomed to spending and wish to maintain their lifestyle, regardless of disability, often find that they need insurance to protect their lifestyle.
The challenge is to be able to look realistically at insurance type, coverage, and premiums to find the solution that best meets the family’s unique needs. In addition, the insurance should be analyzed to avoid excessive premiums while alleviating fears.
At Bordeaux Wealth Advisors, we prepare comprehensive financial plans for our clients to assess whether they’re on track for a comfortable lifestyle, regardless of their health. When our clients need insurance to protect their lifestyle, we analyze all possible solutions to find the best fit. Once we find the best solution, we continue to work with them to optimize their entire financial future and wealth management plan.
1 Disability Facts and Statistics. Click here to learn more
