Is Group Disability Insurance Right for You?

Do you need to buy disability insurance for your organization?

All smart businesses have a disability insurance plan. It protects you and your organization against a loss of income due to disability.

Yet, there’s a difference between group disability insurance and individual insurance plans. What are these differences, and how do you tell which one works best for your business?

We go into everything you need to know below! Keep reading to learn more!

What Is Disability Insurance?

Disability insurance protects employee income in the event of a disability or illness. The coverage often comes as part of an employer’s benefits package. Companies may also offer it as an optional benefit.

Once you opt into a plan, the insurance company bills you a monthly premium. If anyone on the plan becomes sick or disabled, the plan will replace a percentage of their income.

U.S. law doesn’t require businesses to have long-term disability insurance. Yet, companies in Rhode Island, Hawaii, New York, New Jersey, and California must provide short-term disability insurance.

Disability Insurance vs. Workers’ Compensation

But, almost every U.S. state requires companies to provide workers’ compensation to their employees. Workers’ compensation also provides income protection to injured or disabled employees. What is the key difference between workers’ compensation and disability insurance? It lies in when the injury happened.

Workers’ compensation only covers injuries that occur on the job. It allows them to receive a part of their income while they take time off to recover.

Disability insurance covers the off-the-clock hours of a person’s life. As such, employers sometimes have both workers’ compensation and disability insurance. This certifies coverage no matter when the person becomes disabled.

Group Disability Insurance

Think of group disability insurance like group health insurance. Usually, the company selects a plan for all their employees and gets a lower monthly premium.

Often, the employer covers at least part of the premium for their employees. Some may cover all of it. If you don’t choose to cover the entire premium, the rest should come out of your employees’ paychecks.

Who Benefits from Group Disability Insurance?

Group disability insurance best serves entire companies. They don’t want to pay the high premiums associated with purchasing individual plans.

Employees who change careers sometimes won’t take their insurance with them, either. So, you only need to ensure your employees for as long as they work for you.

Also, group disability insurance plans usually cover pre-existing conditions. So, take your employees’ current conditions into consideration when thinking about purchasing coverage.

Long-Term vs. Short-Term Group Disability Insurance

So, what are the differences between long-term and short-term group disability insurance?

First, short-term disability insurance covers your employees or yourself for a shorter amount of time. It usually lasts for 3-6 months, depending on the policy. Long-term disability gives you coverage for anywhere from over 6 months until you retire, depending on the plan.

Differences also exist in the amount of coverage provided. Short-term plans usually cover more of your income. Sometimes, it replaces up to 70% of your paycheck. Long-term plans tend to cover less, with the exact amount depending on the plan.

For the greatest coverage, get both short-term and long-term coverage. That way, if your employees need longer to recover, they can use their long-term disability plans.

Individual Disability Insurance

Individual disability insurance plans also become useful, but they are intended for individual policyholders. As such, group discounts do not apply.

Also, some individual policies do not cover pre-existing conditions. This means policyholders may not get coverage for disabilities they have already suffered.

If you have employees with disabilities, you should not encourage them to purchase individual plans. Instead, try to offer a group plan.

Who Benefits from Individual Disability Insurance Policies?

People who gain the most from individual disability policies don’t have a plan offered at work. Individual policy plans often offer great coverage options.

Yet, the premiums often become more expensive. This is especially true because the employer doesn’t cover the premium.

So, employers should prioritize getting group disability insurance benefits for their office.

Why Should You Consider Group Disability Insurance?

The benefits of group disability insurance go further than just the coverage your employees receive.

First, it helps you attract skilled workers. When you list disability insurance as one of your offered benefits, people who want to safeguard their income will want to apply to your job postings. Since not every company offers this type of insurance, it helps you stand out from the rest of your competition.

Also, it helps you retain your talent if they become injured. Otherwise, long recoveries may lead to unpaid time away from work, causing your talent to look for work they can do at other companies. When they receive portions of their pay, they may not need to leave your company.

Save Money on Your Taxes

How do you make sure you get disability insurance and save money?

Group disability insurance features tax-deductible premiums. So, the more employees you have on your plan, the more you will save on taxes each year!

Plan Design Flexibility

Insurance carriers often offer a variety of plans that allow you to choose one that suits your needs.

So, when choosing a plan, get together with your team. Determine what you want in an ideal plan. Then, look for a plan that suits your needs.

Ready to Get Group Disability Insurance?

When you want to get group disability insurance, our team is here for you!

We believe every company should have disability insurance. Whether you choose to get short-term or long-term disability insurance, our trained professionals can help pick the best plan for you.

If you want to learn more, contact us today!