Posted 6 December 2016
Group Disability Insurance
What is Group Disability Insurance?
If you ask someone what the most important things to cover with insurance are, likely answers will be their car, their homes, their health, maybe even their phones. Typically, most members of the general population will have their homes and cars covered by insurance policies, along with health insurance and possibly life insurance, but what happens if a person’s paycheck itself is in danger? Isn’t a person’s pay check one of the most important things to cover?
That is where Group Disability Insurance steps in. Group Disability Insurance can cover someone’s income. It provides monthly payments to cover a percentage of their salary when someone is unable to work due to illness or injury. That loss of income during one of these unforeseen- or sometimes even planned- circumstances could be disastrous for any family. The monthly benefit can help pay for bills and other expenses that health insurance traditionally does not cover.
Disability is scary to think about, and it may seem like something that only happens to other people. But according to the Council for Disability Awareness, at least one out of every four workers will become disabled at some point during his or her working career. Disability Insurance allows these employees to be covered for the unexpected financial obligations that come with changes to personal situations. This financial cushioning is not only for those with limited income, it also helps those who live certain lifestyles. This security will allow the lifestyles that employees have worked hard for to be maintained during uncertain times. Disability Insurance could very well be the assistance which allows employees to keep their homes and cars, provides child care during health crises, and enables them to get their health back so they can return to work.
Who makes up the Group in Group Disability?
Group Disability Insurance is a single disability policy that covers a group of people. The insured group has a common interest or association, such as an employer or a trade. Because it is more cost effective for the insurance company to underwrite insurance for a group than for individuals, the group premiums are often much lower than those for individual disability insurance. These premium payments can also be tax-deductible if the benefits are paid with pre-tax dollars by plan participant. Group Disability Insurance is not only economical, it can allow for a better product.
What are the requirements for Group Disability Insurance?
Aside from the benefit of cost, Group Disability policies often have fewer underwriting restrictions than individual disability policies. Therefore, in many cases, a Group Disability Insurance policy can be offered without any medical exam or other proof of health. On the other hand, an Individual Disability Insurance policy requires a medical exam and sometimes a financial review. For people who have pre-existing medical conditions, credit issues from past mistakes, or an income that makes them ineligible for affordable insurance premiums, Group Insurance may be the only avenue to obtain a strong, cost-effective disability policy.
What if someone already has Disability Insurance?
A person may already be covered by a small disability policy, through an individual policy or linked to health insurance coverage. This may be short-term coverage, long-term coverage, or both. Short-term coverage pays a weekly benefit, usually after the 14th day of an accident or illness and typically for a shorter period. Long-Term coverage pays a monthly benefit that begins after an elimination period or when the short-term period expires. The benefits are usually paid until age 65 or Social Security Normal Retirement Age. Each plan may vary. Individual policies and Group policies can be combined without offsetting the benefits of the other. This is a common technique used to reduce income exposure.
Won’t Social Security Cover pay for disability?
Relying exclusively on this type of insurance can be dangerous. Social Security pays benefits only under strict definitions of disability, so it can be extremely difficult to qualify. The waiting periods may be longer than that of a disability policy. Additionally, benefits are limited and may not meet your current needs. It is also important to remember that politics continuously affect Social Security policies. What is covered today may not be covered next year, or in the next decade.
When purchasing Disability Insurance, it is important to insure as much income as is fiscally possible. A small investment now ensures that lifestyle, security, and peace of mind are all maintained should a person become the one in four.