Disability Insurance
Disability coverage is one of the most sought-after benefits a company can offer its workforce. Such plans provide important income protection for employers' most valuable asset -- their employees – and represent a valuable aid in employee retention. Two primary employer disability products – group long term and short term disability – are usually offered with a choice of being employer paid, employee paid or combination of employer/employee paid plans.
Disability plans go beyond just providing benefits checks – these plans provide products and services to help employees get back to work. If an employee is partially or fully disabled their salary will likely be reduced or eliminated, but they will still continue to have their everyday living expenses. Most employees will not have adequate savings to carry them through a period of disability and may struggle to support themselves until they can return to work and earn a paycheck.
Group Short Term Disability Insurance
Short term disability is a type of insurance that pays a percentage of an employee's weekly salary for a specified amount of time, if they are ill or injured, and cannot perform the duties of their job. A short term disability policy can be an employer or employee paid benefit. Benefits are paid almost immediately after an injury or illness are are payable for 13 to 26 weeks.
Features of Short term plans may include:
- Coverage for non-occupational sickness, mental illness, substance abuse and pregnancy
- Partial and residual benefits
- Recurrent disability benefits
- Multiple causes of disability benefit
- Vocational rehabilitation or rehabilitative employment benefits
Group Long Term Disability Insurance
Long term disability pays monthly benefits to replace typically 60% of income lost as a result of a prolonged disability. Eligibility varies based upon an employee's inability to perform the material duties of his/her occupation on a full-time basis or all such duties on a part-time basis as well as a loss in pre-disability earnings while working in their occupation. Benefit payments can last until the employee reaches normal social security retirement.
Features of long term disability plans may include:
- Multiple monthly benefit maximums and elimination periods
- Various income replacement percentages
- Definition of disability covering own occupation and any occupation
- Choice of plan designs
- Availability on a non-contributory, contributory and voluntary basis
Individual Disability Insurance
The policies are owned by the insured and are very similar to group long term disability. Again they replace lost income due to an illness or injury which prevents an individual from working. These plans are very important if one does not have disability coverage through their employer or has income that is not covered by their employer’s plan, so they can be an important supplement to employer provided coverage.
Features of individual disability plans may include:
- Guarantee premiums and non cancelable
- Various monthly benefit maximums and elimination periods and benefit duration periods
- Coverage for your occupation
- Partial/residual disability coverage
- Inflation protection or right to increase coverage without insurability