Employers enjoy a variety of advantages, such as bonuses, overtime and vacation pay, and compensation. One of the most beneficial benefits is an employer-sponsored benefits package. It is because they often include short and long-term disability insurance.
What Is Group Disability Insurance?
Employers usually offer group disability insurance as part of their benefits package. Certain employers cover the plan’s cost independently, and others can share the cost with employees. In any case, the coverage for group disability is a lasting benefit if you cannot work due to an illness or injury that causes bodily harm. This protection helps safeguard your earnings so that you can concentrate on recovering.
Apart from the disability coverage, it might be able to see life and dental and health insurance. Since the employer typically pays for these benefits, employees highly appreciate the group’s policies.
Within the group plan, there are two kinds of disability insurance, including long-term and short-term disability insurance.
Insurance for Short-Term Disability
The name of the policy suggests that short-term disability insurance protects you for a brief period. It will pay you an annual indemnity if you’re disabled due to an injury to your body or illness.
Many disabilities last longer than that, and short-term disability insurance won’t be enough to safeguard your earnings. It is where long-term disability insurance comes into play.
Insurance for Long-Term Disability
Long-term disability insurance kicks in immediately after your short-term disability benefits have ended. Instead of monthly payments, you get an income per month from the company that you have insurance.
Why Group Disability Benefits Are Not Reliable
Long-term and short-term disability insurance sounds excellent. Why do you require additional disability insurance? Shouldn’t it be redundant? Most of the time, it’s not. Here are seven reasons why.
Payouts Are Low
Most policies in the workplace limit your monthly salary. Although employees who earn lower wages may not be aware of the difference, those earning high salaries most likely will.
Exclusions from Earnings
Some jobs have a lower base salary. However, they have bonuses and commissions that are high. In the group LTD case, the basic wage gets considered when calculating your benefits.
None of the incomes mentioned above will get considered when calculating your monthly salary. Even if you work a lot of overtime, receive a bonus at the end of the year, or receive significant commissions from sales you generate.
Taxable Benefits
The claims you receive are tax-deductible if you have policies for group members that are 100% employer-funded. While having no out-of-pocket expense is great, the income replacement benefits you receive may not suffice to cover your costs following the deduction taxes.
The Absence of Features
These disability insurance riders boost your protection for a minimal cost. The group plans are standard for all employees. The employer selects the plan’s structure and gives employees no options of benefits available as optional riders.
For instance, a Living cost rider can increase the monthly amount by the inflation rate each year. Another crucial benefit includes the rider with partial disabilities that pays less for those who are partially disabled. You’re not likely to see this type of rider on your group plan.
Any Job After Two Years
Did you know what constitutes a disability that gets changed after two years of an application? Instead of assessing your capacity to perform your job, you’ll have demonstrated that you cannot get employed in any lucrative position.
What get considered to be a lucrative job? It’s a job where you’re competent based on your work experience, education, and training. For example, suppose the job you are working in requires a specific skill. Suppose you are unable to hold your hands. In that case, however, you can still teach your students, but the insurance company could reduce your benefits as you can work in a new job.
There Is No Portable Coverage
What happens if you choose to switch employers? Your group plan won’t go with you, and you’re without any protection if your new employer doesn’t provide good benefits.
Employers May Reduce or Cancel Coverage
Group benefits aim to balance employees’ requirements and the plan’s cost. If the price increases due to increased claims, your employer could look at reducing the coverage or even removing it entirely from the benefits package.
Although it might seem a drastic move, employers must ensure the longevity of your benefits program. Therefore don’t be shocked to see the loss of disability benefits shortly.
How You Can Increase Your Group’s Protection
Although the negatives of a group policy could be scary, you’re without options. The best option to mitigate these disadvantages is through the individual insurance plan for disability. Contrary to employer-sponsored goals, you have this personal policy and can decide what you want to do.
Also known as Supplemental disability insurance, an individual disability policy addresses the problems discussed in the preceding section. It is how personal coverage via a private business can benefit.
Payouts Are Higher
Since it is your policy, you decide on the amount of benefit. The Supplemental Disability Insurance policy will cover more of your costs.
Earnings Calculation
It is possible to include all kinds of income you earn to calculate the amount of disability insurance you can purchase. It includes bonuses, salary commissions, overtime, and more. So long as you file this on your tax returns, you may make use of it to determine the disability coverage you have.
Tax-Free Benefits
One benefit of an independent disability insurance policy is that it allows the insurance provider to provide you with tax-free benefits.
Make Your Coverage Unique
You can select the benefit amount, the removal period, the benefit period, and optional riders if you have an individual disability policy. For instance, you may purchase an adjustment for the cost of living and partial disability riders if they meet your budget.
Regular Occupation
In contrast to the long-term disability insurance offered by groups, Individual plans allow you to extend the average period of employment until age 65. What does this mean? Insurance companies won’t assess your capacity to perform a lucrative job after two years of claims. Instead, it will continue to provide you with benefits until you cannot complete your job.
Coverage Follows You
You don’t need to be concerned about your long-term disability insurance. With an individual disability insurance policy that covers you, the coverage will go wherever you travel. When you choose to change jobs, launch a new business, take a sabbatical from your career, or go on vacation.
Guaranteed Coverage
Can an insurance company cut or eliminate your coverage? It’s not possible with the most effective individual disability insurance policies. They are not refundable and are guaranteed to be renewable. That means when your insurance is in force, the insurance provider cannot reduce your benefits, end the coverage or raise your premiums.
Only you can modify or cancel your Disability insurance plan, which puts you in total control.
Ottawa Life Insurance is here to assist you with your personal and business insurance needs. Call us at (613) 454-1424 or email us at info@ottawa-lifeinsurance.ca for further information.
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