May 22, 2009, Newsletter Issue #58: How Employer Disability Insurance Differs From Individual Coverage

Tip of the Week

Group or employer disability insurance coverage is a wonderful employee benefit. But if you are a highly compensated professional performing specialized duties for excellent compensation, you need to adequately protect your current and future earnings. Employer disability insurance may not accomplish that goal for a number of reasons.

Often this coverage is obtained for the entire group of individuals working at your company. Disability income statistics for the occupation variety in this group and the level of coverage desired play a large role in determining the cost of disability insurance. Since a goal of most health insurance programs is to provide equal levels of protection for all group members, if you are a highly skilled professional, your risk of disability may be lower and your protection needs may be greater. Disability employment statistics and/or group policy restrictions often prohibit you from adding the additional protection you need and deserve.

Therefore, it often makes perfect sense to consider purchasing individual disability insurance coverage for yourself. This choice allows you to custom design the levels of disability income, elimination (waiting) periods, length of benefit period, and other important features. These features might include “own occupation” disability definition, future income increases, guaranteed renewable or non-cancelable protection, waiver of premium, return of premium, and/or benefit periods up to lifetime coverage.

Having individual disability insurance coverage will come at a cost, but, compared to the potential of losing your income stream for a long period of time, this protection usually makes excellent fiscal sense. Your ability to tailor your coverage terms often permits you to have the protection you want, not coverage defined by the wishes or financial decisions of an employer.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.

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