Group Disability
Insurance

Features of Group Disability Insurance

Group disability insurance can have different features depending on the plan, the provider, and the employer. Some of the common features are:

Coverage amount. The coverage amount is the percentage of the employee’s salary that the group disability insurance will pay as a benefit. The coverage amount is usually 50% to 70% of the employee’s salary, up to a maximum limit.
Benefit period. The benefit period is the length of time that the group disability insurance will pay the benefit. The benefit period can vary from a few months to several years, depending on the plan and the type of disability. For example, some plans may pay benefits for 12 months, 24 months, or until the employee reaches a certain age, such as 65 or 67.
Elimination period. The elimination period is the waiting period between the onset of the disability and the start of the benefit payments. The elimination period can range from a few days to a few months, depending on the plan and the type of disability. For example, some plans may have an elimination period of 7 days for short-term disability and 90 days for long-term disability.
Definition of disability. The definition of disability is the criteria that the group disability insurance uses to determine whether an employee is eligible for the benefit. The definition of disability can vary from plan to plan, but generally falls into one of the following categories¹:
- Own occupation. This means that the employee is considered disabled if they are unable to perform the duties of their own occupation, regardless of whether they can work in another occupation. This is the most favorable definition for the employee, as it provides the most protection and flexibility.
- Any occupation. This means that the employee is considered disabled only if they are unable to perform the duties of any occupation for which they are qualified by education, training, or experience. This is the least favorable definition for the employee, as it provides the least protection and flexibility.
- Modified own occupation. This means that the employee is considered disabled if they are unable to perform the duties of their own occupation, and are not working in another occupation. This is a compromise between the own occupation and the any occupation definitions, as it provides some protection and flexibility, but not as much as the own occupation definition.

Group disability insurance can provide several benefits for both employers and employees…

Affordability. Group disability insurance is usually cheaper than individual disability insurance, as the risk is spread among a large group of people. The premiums are also typically paid by the employer, or partially subsidized by the employer, which reduces the cost for the employee. Group disability insurance can also offer lower or no underwriting requirements, which means that employees do not have to undergo medical exams or provide health information to qualify for the coverage.
Convenience. Group disability insurance is usually easier to obtain and manage than individual disability insurance, as the employer handles the enrollment, administration, and claims process. Employees do not have to shop around for different plans or providers, or deal with the paperwork or hassle of filing a claim. Group disability insurance can also be integrated with other employee benefits, such as health insurance, retirement plans, and paid leave, which can simplify the coordination and communication of the benefits.
Protection. Group disability insurance can provide financial protection and peace of mind for employees and their families, in case of a disability that prevents them from working and earning an income. Group disability insurance can help cover the essential expenses, such as mortgage, rent, utilities, food, and medical bills, that may otherwise cause financial hardship or debt. Group disability insurance can also help maintain the standard of living and quality of life of the employees and their families, and reduce the stress and anxiety that may accompany a disability.

Comparison of Group Disability Insurance and Individual Disability Insurance

Group disability insurance and individual disability insurance are two types of disability income insurance that can provide financial assistance to employees who are unable to work due to illness or injury. However, they have some differences, such as:

Coverage amount. Group disability insurance usually pays a percentage of the employee’s salary, up to a maximum limit, while individual disability insurance usually pays a fixed amount, based on the policy and the employee’s income. Individual disability insurance can provide higher or lower coverage than group disability insurance, depending on the employee’s income and the policy.
Benefit period. Group disability insurance usually has a shorter benefit period than individual disability insurance, especially for long-term disability. Group disability insurance may pay benefits for a few years or until a certain age, while individual disability insurance may pay benefits until the employee reaches the retirement age or the end of the policy term.
Elimination period. Group disability insurance usually has a shorter elimination period than individual disability insurance, especially for short-term disability. Group disability insurance may have an elimination period of a few days or weeks, while individual disability insurance may have an elimination period of a few months or longer.
Definition of disability. Group disability insurance usually has a stricter definition of disability than individual disability insurance, especially for long-term disability. Group disability insurance may use the any occupation or the modified own occupation definition, while individual disability insurance may use the own occupation or the modified own occupation definition.
Premiums. Group disability insurance usually has lower premiums than individual disability insurance, as the risk is spread among a large group of people. The premiums are also typically paid by the employer, or partially subsidized by the employer, which reduces the cost for the employee. Individual disability insurance usually has higher premiums, as the risk is borne by the individual. The premiums are also typically paid by the employee, which increases the cost for the employee.
Taxes. Group disability insurance usually has taxable benefits, while individual disability insurance usually has tax-free benefits. If the employer pays the premiums, the benefit may be taxable as income. If the employee pays the premiums, the benefit may be tax-free.
Portability. Group disability insurance usually has low or no portability, while individual disability insurance usually has high or full portability. Group disability insurance is usually tied to the employer or the group, which means that employees may lose their coverage if they leave their job, change their group membership, or retire. Individual disability insurance is usually independent of the employer or the group, which means that employees can keep their coverage regardless of their employment or group status.
Customization. Group disability insurance usually has low or no customization, while individual disability insurance usually has high or full customization. Group disability insurance is usually designed to meet the needs of the average or majority of the group members, which means that it may not suit the specific needs or preferences of individual employees. Individual disability insurance is usually designed to meet the needs of the individual, which means that it can suit the specific needs or preferences of individual employees.

Why We’re Different

While most insurance products are similar in price and function, insurance providers vary when it comes to structuring a policy tailored to you. After all, there’s no such thing as a one-size-fits-all insurance policy when it comes to your business.