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What is Disability Income?

A sudden interruption of income—due to an extended period of sickness or injury—can have serious financial consequences for many of today’s employees. If you are lucky, you may receive group disability benefits through your employer.  However, you will need to make sure the benefits available through your group disability coverage are adequate for your needs. Group disability benefits are taxable if your employer pays the premiums, may be capped at a relatively low amount, and may not cover variable income such as bonuses or commissions.  As such, these benefits may not be enough to maintain your lifestyle or pay all your bills if you become too sick or injured to work.

An individual disability income insurance policy can help supplement your group long term disability benefits and protect a larger portion of your income. An individual disability income insurance policy you purchase on your own is fully portable, meaning you won't have to worry about losing coverage if you change jobs, and the benefits are generally paid are tax free if you are the premium payor.1 In addition, an individual disability income insurance policy is non-cancelable by the carrier (as long as the premiums are paid), and with a guaranteed renewable policy, your premiums will never change for the life of the policy.

Disability income insurance policies have exclusions and limitations.

 

1 The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. We are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

Disability income insurance policies have exclusions and limitations.

CRN202209-271451

Individual, Fully Underwritten Disability Income Insurance

Individual, fully underwritten disability income insurance can be offered to employees to supplement employer-provided group long term disability benefits. Typically, group long term disability benefits pay about half an employee's net monthly income. Employees who have an individually owned disability income insurance policy can protect a larger portion of their income and design the policy to fit their specific income needs. Individual disability income insurance coverage is non-cancellable, fully portable, and premiums may be available at a discount.

Guaranteed Standard Issue Disability Income Insurance

Guaranteed standard issue disability income insurance is supplemental individual disability income insurance for employees. This coverage may help protect a higher amount of income than a group long-term disability insurance policy alone. Supplemental coverage can help bridge the gap between current earnings and benefits available through a group long-term disability insurance policy. Note that the two policies do not coordinate benefits; claim decisions are rendered independent of each other.Guaranteed standard issue disability income insurance is supplemental individual disability income insurance for employees. This coverage may help protect a higher amount of income than a group long-term disability insurance policy alone. Supplemental coverage can help bridge the gap between current earnings and benefits available through a group long-term disability insurance policy. Note that the two policies do not coordinate benefits; claim decisions are rendered independent of each other.

Advantages to employees:

  • Designed to replace a higher percentage of income when eligible for benefits under both policies
  • Simplified underwriting
  • Offers a permanent premium discount and is fully portable
  • Covers a portion of bonus and incentive compensation

Advantages to employers:

  • Enriches employee offerings at no cost to employers
  • Allows for easy implementation

Disability income insurance policies have exclusions and limitations.

CRN201903-208966