Injuries are unpredictable, and most of us are not equipped or prepared for the implications they can bring. Have you ever lifted something heavy and strained your back? Or missed a step while walking down the stairs causing you to take a ride? That is sure to leave some bumps and bruises! Even worse is when those injuries or a serious illness forces you to miss work for an extended period of time. Health is wealth, and not being able to earn a wage and support yourself and/or your family because of an injury or illness can cause financial hardships. What if there were ways to protect yourself and/or your employees in the event that an unforeseen accident occurs, and they are unable to work? For those that are unaware of the mechanics of a disability income insurance plan, essentially it pays out when a person is unable to work because of a disabling injury or illness. Doesn’t that sound like music to your ears? Before you purchase a plan, there are some things you need to know. Disability insurance can have a variety of different features that you may need to review to see what may fit your needs best.
Short-term disability, or STD insurance, usually provides a benefit after an elimination period. The period can be as short as 0 to 14 days of being disabled. STD may pay benefits for up to two years, but many pay for three months to a year. Long-term disability insurance, or LTD, would have an elimination period of 30 to 720 days and pay benefits for a year to a lifetime. A benefit period of “To Age 65” is common, but with changing regulations this age could limit could increase as people are working until they are older. The LTD can be designed to start when the STD ends.
For those who are concerned with the cost of disability insurance, there are options for you. Group disability insurance can be a lower cost option than an individual plan because your employer would pay all or part of the premium. Many employers offer this benefit to their employees. When enrolling for a group plan, there can be 2 different options, contributory and noncontributory.
Contributory is when you sign-up and must contribute to the premium. As you may have guessed, noncontributory is when your employer covers 100% of the premium. Another reason that premiums may be lower for a group versus an individual is because the insurance company is able to spread their risk. Insuring a group of people is less risky than insuring one person. There are also fewer underwriting restrictions for a group than for an individual, partly because groups may have a favorable percentage of people who are considered “good risks.” Some of the price dictators that could affect the price of your premium include percentage of insured wage, the age you select until it stops payment, long-term or short-term, as well as the elimination period (the time between the accident or illness, to the time the plan begins to payout).
The benefit of an individual disability policy is that it has “portability.” This means that you can take it with you even if you move or change employers. You can design it to your likes so that it fits all of your needs, such as determining the waiting period and the percentage of wages that it will pay. They can be very flexible. The benefit of an employer having a good disability plan for its employees is raising company morale. It’s proven that employees who feel like they are valued and taken care of will work harder and exercise more loyalty. Also, you will have the peace of mind knowing that if someone was injured or developed a serious illness, they will still receive compensation.
For more information on other benefits that could be available to your employees, read our previous blog, “Tips on How You Can Afford Health Insurance Benefits for Your Employees” MHG Insurance Brokers offer many different insurance solutions for many areas of business. If you are interested in purchasing a disability plan, health insurance, or life insurance, contact us at mhginsurance.com or call us at +1 954 828 1819. Our insurance specialists have the knowledge and experience to assist and guide you to the best coverage for your budget.