Understanding Disability Insurance - Group vs Individual
Did you know there is a big difference between group disability insurance and individual disability insurance? Is owning employer paid group disability even worth it? Absolutely. The reality is most employees wouldn’t have any coverage if it wasn’t for the fact that it was a company paid benefit. Most “true” group plans cover up to a 60% salary replacement.
The first attraction to true group insurance plans is the underwriting, or the lack of it. However, there is a danger with this since it’s less involved the group or the association plan can possibly get cancelled by the carrier. The second potential disaster is that based on higher claims experience of the association, the carrier could raise the rates.
This is why many people will make sure they are covered with individual disability insurance.The first and most positive feature is that it’s portable. If you have an individual policy and you leave your company, you can take it with you. As a matter of fact, many employees that plan on leaving to start their own businesses will consciously put a disability policy in place to make sure they’re covered while that business is trying to get off the ground.
Another drawback to true group is that you have to be permanently and totally disabled. Individual policies have much more flexibility with riders that will allow you to be covered for a partial disability. They also offer additional riders to leave you flexibility in acquiring additional coverage when your salary increases. One last feature of an individual disability policy is you can have a catastrophic rider which would cover you with an additional benefit on top of the base benefit should you become catastrophically disabled.
So it’s an important decision when you’re deciding to simply keep the true group plan that is offered through your employer, or purchase an individual policy on your own. There are pro’s and con’s to each, but one thing is for certain, not having disability coverage can be a financial disaster should you become disabled.
About the author: Mark Yurkovic has been in the life insurance business for over 12 years, and holds CLTC, LUTCF, and CES designations. He enjoys building remote control boats, and playing instruments including the piano, guitar, banjo, and mandolin. Mark would love to discuss life insurance options and work towards finding the best policy fit for your family. You can contact Mark at 1-800-651-1953 or MYurkovic@Pivot.com.