We are often asked by our executive, business and medical professional clients why they need individual disability insurance in addition to their group disability insurance program through their employers. Here is a quick summary of the differences you can share with your clients:
Group disability insurance has the advantage of lower premium over individual disability insurance. If price were the only consideration, without any other factors being considered, then group disability insurance would be the likely choice. However, here is a list of other factors about group disability insurance your clients should consider:
- Can the insurance carrier providing the group coverage decide not to renew it?
- What is the definition of disability? Is it own occupation to age 67? Does it shift from own occupation to any occupation after 2 or 5 years?
- Is the policy portable if the employee leaves their employer?
- Does the policy have a residual or recovery benefit? Does the insured have to be fully disabled and then return to work to receive residual or partial benefits?
Individual disability policies are owned by the insured and follow the insured wherever he or she is employed. They are not cancelable as long as the premium is paid.
Individual policies also insure most professionals to age 67 in their own occupation. And most individual disability policies for professionals have residual and recovery benefits that do not require any period of total disability. This is important because 30 percent of all individual disability claims are residual/partial only.
So, your professional clients may pay more for individual disability policies, but the paycheck protection benefits of these policies are stronger.
When discussing the difference between group disability insurance and individual disability policies, make sure your clients are aware of these differences and ask them to let you review their group disability policy.
If you are not savvy about group disability contracts, Source Brokerage’s disability income specialists can help you review your client’s group plan, too. We can also provide an individual disability quote you can share with your client. In addition to his or her group benefit, he or she can layer an individual disability income policy on top of his or her group disability insurance to insure the most comprehensive paycheck protection.