June 19, 2009, Newsletter Issue #62: How Disability Insurance Compares to Workers Compensation Insurance

Tip of the Week

Workers compensation insurance programs are somewhat comparable to employer disability insurance plans. There are also some significant differences of which you should be aware.

Workers compensation insurance is business-related coverage that is mandated by and explained in state regulations. Unlike classic employer disability insurance coverage, the employer is not really offering a package of coverage based on their wishes and financial ability. Employers must provide coverage as specified by state regulations. Unlike private disability insurance plans, which often provide benefits whenever you suffer a covered illness or injury, workers compensation insurance provides coverage for physical disabilities that occur when you are working only. This coverage is a bit more restrictive in its definition of disability. Rates may often be directly affected by the disability statistics of your own company as well as the disability risks of your industry and state mandates. Workers compensation insurance is a valuable component of an employee’s health insurance package. However, as a required benefit, workers compensation does not provide the level of choices offered by individual disability insurance protection. Employer disability insurance is also a valuable benefit, but similar to workers compensation coverage, it is created with the “group” in mind, not the individual. If you are a medical or other professional, you should consider purchasing individual disability insurance and adding one or more of the available custom features to increase your protection.

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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