Disability Insurance

Whether people live paycheck to paycheck or have some savings, if a job is lost or work time is missed because of illness or injury, the financial fallout can be brutal and difficult to recover from. You can protect your employees and their families with group disability insurance.

Understanding Group Disability Insurance

Group disability insurance is one disability policy that covers a designated group of eligible employees. The cost of group disability insurance coverage is often less than if a person were to seek individual coverage. Employers who offer disability coverage typically have the option of choosing a plan that is contributory (employees sign up for the offered coverage and contribute to the premium) or noncontributory (employer funds the plan and employees who meet the requirements are automatically enrolled).

Disability insurance can replace a portion of an employee’s income until they are able to return to work. This coverage provides the money needed to pay for necessities – mortgage, rent, car loans, utilities, groceries, and other expenses – but it does not offer coverage for medical services.

The other major benefit of disability insurance is that it can often be enough to prevent employees from having to dip into their retirement savings or their kids’ college funds to afford daily life now.

What Employees Appreciate About Group Disability Insurance

Employees appreciate benefits that give them peace of mind about money matters. Group disability insurance offers the following benefits:

• Individual health evaluations are not required for eligibility (though eligibility may be dependent on a person’s length of employment, and enrollment must occur within a designated enrollment period to take advantage of the minimal underwriting restrictions).
• Certificates of coverage are issued to the employees who apply for disability insurance, providing proof that coverage exists as well as the amount and type of coverage.
• Premiums in group disability insurance plans are much lower than in individual insurance policies.
• Premiums are paid to the policyholder (the employer), usually through payroll deductions.

Drawbacks of Group Disability Insurance

It’s important to understand how group disability insurance works across the board. For some employers and some employees, there are more cons than pros to participating in such a plan. For example:

• Coverage cannot be converted into an individual disability policy if an employee leaves the job.
• Periodic increases in insurance premiums after a guaranteed period has expired.
• If workers’ compensation benefits are received, group disability insurance benefits will be reduced.
• The ability to receive disability benefits may sometimes rest on whether an employee can perform any job – even one outside their expertise.
• Typically, benefits received from group disability plans are taxed.
• Group disability insurance policies are not very flexible, so if part of the income that employees rely upon includes bonuses or commission, the maximum benefits payable may not accurately reflect an employee’s true income.

Types of Group Disability Insurance

There are different types of disability insurance, and the type that is best for your company and employees will vary. Options can include:

• Short-term disability
• Long-term disability
• Statutory disability
• Paid family leave
• Salary continuance
• Administrative services only
• Advice-to-pay
• LTD reserve buy-outs
• Individual disability insurance
• Long-term disability integrated solution

Learn about the different types of group disability insurance so you can determine what might work best for your company and employees. Speak with a representative from The Benefits Group about enrolling in a plan and simplifying the administration of the plan so you and your employees can get the most out of this benefit.