What You Should Know About Group Disability Insurance
Group Disability Insurance
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Most people never think about purchasing an individual disability insurance policy, because they believe they are set with the group disability insurance plan, provided by their employer. While it's true that some group disability insurance plans can provide adequate coverage, in comparison, it appears that individual insurance plans offer more benefits and advantages.
Group disability insurance has many limitations. Usually workplace disability benefits cover about 50% of your monthly income. This is about standard, as no policy can guarantee you 100% of your monthly gross. However, some policies do state that the injury has to be work related before you can qualify for coverage. Furthermore, these payments are taxable if the
employer pays the monthly premiums, and coverage will not include any bonuses or incentives. Lastly, a maximum monthly cap on most group disability insurance policies can significantly affect the total amount of your check.
If Group Disability Insurance Is Not Enough
With individual disability insurance, if you are injured and unable to work you can receive up to 60% of your total monthly gross, all tax free. You are open to bonuses and incentive compensation, and there is usually not a maximum monthly cap.
Individual disability insurance, unlike group disability insurance, can protect you financially even in a worst case scenario. If you can ensure workers' compensation as well as individual disability insurance, then more salary to you! However, if you don't have disability insurance, and if you find out that you're denied coverage from your group disability insurance policy, then you're stuck without a job or any income for an indefinite period of time.
You may have a savings account waiting for use in an emergency. This is an emergency! But think about how that will affect all of your future plans. What if you are making financial plans for retirement, college pay or a mortgage payment? It's not really borrowing, more like stealing from your own savings account. But with reliable disability insurance coverage in place, you can still pay your most important bills and not have to postpone all of your future plans.
What Disability Insurance Does Not Cover
Disability insurance can help you out a great deal. However, even a good policy may have some special exclusions and terms to which you have to pay careful attention. There may be waiting periods, special reductions (if you have workers compensation or social security) and other limitations to be concerned with. Never sign a contract without understanding the entire wording. If there are any doubts then ask your insurance agent to explain the contract to you.
Furthermore, disability insurance is not to be confused with health care, which pays for medical bills, doctor visits and other health-related issues. Disability insurance provides you with disability income—a protection against unemployment, if you're forced to take a leave of absence from work. Group disability insurance may be enough, depending on the terms of your policy. But if you are self employed, or have reason to question your current plans coverage, then an individual disability insurance policy may be just what you need.
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