Employee Benefits - Group Disability Insurance

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Overview

Group disability insurance is similar in form to individual disability insurance. It covers a percentage of an insureds income upon a disabling accident or event. The two main differences are the conditions upon which a person may apply, and the requirements for acceptance. Before applying through a group a person must satisfy the waiting periods and employment requirements of the group. However, once an application can be made the conditions for acceptance are usually less strict than with an individual policy.

What It Is Not

Group disability insurance is not necessarily a guarantee of coverage. There are many rules, set forth by federal and state law, which must be followed closely in order to obtain coverage. Also, group disability coverage is not health insurance. It does not pay for medical bills. It merely replaces a percentage of income.

Evaluating Your Needs

How are people becoming disabled?

When evaluating your needs you need to keep three things in mind:

Definitions of occupational coverage vary widely. Some companies will cover you if you are not able to perform your "own occupation " -- this is the best coverage. Other companies will only cover you if you are unable to perform "any occupation" -- this is the worst coverage. There are also many variations in-between.
Elimination periods. This is the length of time before coverage "kicks in." This can be anywhere from 30 days to 2 years or more.
Benefit periods. This is the amount of time that the coverage will last. This may be from 30 days to age 67 to life.

Purchase Information

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There are hundreds of companies that underwrite disability insurance policies. Choosing between them is mostly a matter of price vs. financial stability, as well as what health and occupational ratings you might qualify for with each one.

It is important to know that purchasing disability insurance policies is not a quick process. Providers may require that you take a para-medical exam above a certain policy size. Likewise, providers may request medical records from your doctors, often pull driving records, and request financial information.

Therefore, we suggest you work with an insurance agent or advisor you trust. It costs you no more than buying online, and can save you lots of time and money.

Product Definitions

Long-term plans

Short-term plans

Long-term disability is what most people think of as disability insurance. It protects for a long period of time, as long as the insured's life. It usually covers 60% of the insured's income or more. However, long-term disability can take a while to start paying.

Short-term disability is for smaller, less serious, disabilities. It covers for a shorter period of time, usually only as much as 30 days. However, it starts paying sooner, sometimes as fast as immediately for accidents and only 7 days of waiting period for sickness.