In general, whether a policy covers a disability depends on the following:
- Whether a disabled employee can work in another field
- How long the employee has been with a company
- What caused the disability
- When the disability first occurred
When a disability is covered, a policy might have limits on how long it will provide payments for.
What’s the Difference Between Own-Occupation and Income-Replacement Policies?
Group disability coverage can be categorized into own-occupation policies and income-replacement policies. Own-occupation policies tend to cost more, but they also usually offer better protection.
Own-occupation policies normally cover disabilities that prevent employees from working in their current occupation or the industry they’re trained for. Even if an employee is able to work a lower-paying job, an own-occupation policy will often still cover the employee’s disability.
In contrast, income-replacement policies typically only cover disabilities that prevent employees from working altogether. If a disabled employee is able to take any other job -- even if it’s just a minimum-wage position -- an income-replacement policy probably won’t provide assistance.
What’s the Difference Between Long-Term and Short-Term Group Disability Coverage?
Group disability coverage can also be categorized into long-term and short-term policies. Both of these have their uses. (There are long-term and short-term own-occupation policies, and there are long-term and short-term income-replacement policies.)
Long-term policies are designed to provide coverage for disabilities that prevent employees from working for months or years. Most long-term policies won’t provide coverage right away. Disabled employees may have to wait a few weeks or months before they begin receiving compensation. Once a long-term policy starts to offer financial assistance, though, it normally will for years -- and sometimes indefinitely.
Short-term policies typically do the exact opposite. They’ll frequently begin making payments as soon as an employee suffers a covered disability. They normally have limits on how long they’ll provide financial assistance for, though. In some cases, their limits may be just a few months or a couple years.
What Sorts of Businesses Offer Group Disability Coverage?
Many businesses, nonprofit organizations, and governments offer group disability coverage to their employees. This is because pretty much anyone could become disabled (even though the risk is higher for some than others), and a disability would be financially devastating for many people. Offering a group disability policy is an easy way to help protect employees from potential financial ruin, and it’s something that almost all employees appreciate.
In some cases, businesses pay a group disability policy’s entire premium and provide the coverage as a standard perk. In other cases, businesses split a policy’s premium with employees. When this is done, disability coverage is normally offered as an optional benefit.
How Can Businesses Get Group Disability Insurance?
Businesses that would like to add group disability insurance to the list of benefits they give employees should contact an advisor who specializes in group benefits packages. An experienced advisor will be able to help businesses compare group disability policies that are available to them and select one that will provide robust and affordable protection for employees.