Insurance is an effective protection tool against a wide range of risks. You have homeowner’s insurance to cover damage to your house and car insurance to protect you on the road. Health insurance helps you get the medical treatment you need. You may even have life insurance to protect your loved ones in the event you pass away.
Disability is another common and highly dangerous financial threat. According to the Council for Disability Awareness, 25 percent of all adults will miss work because of disability at some point in their lives.1
Many people don’t consider disability risk because they have disability insurance through their employer. They may believe that the group coverage will minimize any financial challenges created by a disability. However, group coverage often isn’t enough to minimize every threat. In fact, you could face significant hurdles even if you have group disability insurance.
Below are some of the key differences between group disability insurance and an individual policy. If you don’t have group coverage, or feel yours is insufficient, you may want to talk to your financial professional about additional protection tools.
Group disability insurance is usually less expensive than an individual disability policy. This is true of most types of insurance. The risk is shared and distributed in a group policy, which minimizes the cost. Also, it’s possible that your employer may pay a portion of the premiums.
However, an individual policy may not be as costly as you think. You can often choose the coverage and benefits that are right for you and your budget. A financial professional can help you find the most cost-effective protection strategy.
Disability benefits are usually paid as a percentage of your lost income. That percentage is usually fixed as part of the group plan. It also may not be a significant amount. It’s not uncommon for group plans to replace only half or 60 percent of income.
With an individual policy, you may be able to receive a higher benefit amount. For instance, some may pay up to 80 percent or even 100 percent of your income as a benefit should you become disabled.
One of the biggest challenges with any employer-based insurance coverage is that the protection is tied to the job. If you leave your job, you lose the coverage. And there’s no guarantee* that your new employer will have a similar benefit.
An individual policy stays with you as long as you pay the premiums, no matter where you work. As long as you continue to pay the required premiums, your policy is in force.
Not all disabilities are the same, especially when it comes to the way they’re defined by insurance policies. Many group policies cover only total disability or have an “any occupation” disability definition. That means you’re defined as disabled only if you can’t work in any occupation.
With an individual policy, you can choose an “own occupation” definition. That means you simply have to be too disabled to work in your job, not any potential job. This is helpful if you work in a highly skilled field. For instance, if you’re a surgeon and injure your hand, you may not be able to work in your field even if you could perform other jobs. In that example, you would still get your benefit from an individual policy, but you may not get it from a group policy.
Ready to protect yourself against disability? Let’s talk about it. Contact us at Northern Plains Insurance and Financial. We can help you analyze your risk and develop a plan. Let’s connect soon and start the conversation.
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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