Why does it cost more to insure an employee who’s paid more, for doing the same job with the same risk as an employee who’s paid less?

Comments

2 responses to “Why does it cost more to insure an employee who’s paid more, for doing the same job with the same risk as an employee who’s paid less?”

1. 

   January 21, 2015

   David Pipes CLU. RICP

   The worker’s compensation benefit payable to a more highly compensated individual is greater than the benefit paid to a lower paid individual. The same is true for disability insurance. The premium is general the rate times the benefit. The greater the benefit the higher the premium. All of this is dependent upon the calculation for the benefit.
2. 

   September 17, 2014

   Jim Winkler

   That is a great question, with a very simple answer – while the risks for both employees are the same, the cost of covering their losses isn’t. To replace the salary of the higher paid employee will obviously cost more than the lesser paid employee. Workman’s comp and disability pay a percentage of your pay, so the higher priced guy costs more. I hope that helps, thanks for asking!