Protection Gap
Income Protection Gap Analysis
Most workers carry employer LTD only — capped at $5k–$8k/mo and taxable. That's a 30–50% income gap for high earners.
Executive Summary
Most workers carry employer LTD only — capped at $5k–$8k/mo and taxable. That's a 30–50% income gap for high earners. This protection gap brief synthesizes peer-reviewed research, regulatory data (NAIC, BLS, Federal Reserve SCF, FEMA, SSA), and InsuranceQuoteToolkit's proprietary HRI and FSI scoring models. Use it as a decision-grade reference — not a marketing overview.
Key Takeaways
- Layer private LTD on top of employer plan
- Confirm own-occupation definition
- Match benefit to 60% of gross
- Extend to age 65
Research-Backed Guidance
The findings above draw on multi-source household-resilience research. Our review process triangulates federal data sets (BLS Consumer Expenditure, Federal Reserve SCF, NAIC market conduct filings), longitudinal academic studies, and the InsuranceQuoteToolkit national resilience panel. Read our methodology center for full scoring and weighting details.
- • Federal Reserve Survey of Consumer Finances — liquidity & net worth distributions
- • Bureau of Labor Statistics CEX — household burn-rate baselines
- • NAIC consumer publications — coverage prevalence and gap analytics
- • FEMA National Risk Index — geographic peril exposure
Practical Recommendations
- Re-evaluate after every raise or promotion
- Confirm tax treatment — premium paid post-tax = tax-free benefit
Action Checklist
Print or screenshot this list. Move from a Moderate to Strong tier on the relevant index by completing each item within 60–90 days.
- 1Layer private LTD on top of employer plan
- 2Confirm own-occupation definition
- 3Match benefit to 60% of gross
- 4Extend to age 65
- 5Re-evaluate after every raise or promotion
- 6Confirm tax treatment — premium paid post-tax = tax-free benefit
FAQ
Is employer LTD enough?
Rarely — most cap at amounts that don't replace a senior earner's income.