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Insurance & Employee Benefits
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A person can be entitled to disability benefits based on total or partial disability. Total disability is defined as being unable to perform all the duties of his or her occupation due to sickness or injury. The actual length of time that a person is considered disabled based on the “own occupation” definition varies, and some carriers allow up to 24 months from date of sickness or injury. A person may also be entitled to partial disability benefits if they are unable to perform some of the duties of the occupation due to sickness or injury. A partial disability benefit often reduces the benefit after a period of time to provide a return-
Depending on the structure of the plan, and the length of time an employee is employed before employment is terminated, disability benefits may also be portable to the employee. This allows the employee to maintain the benefit even after voluntary or involuntary termination of employment.
There are two types of disability benefits – Long-
- Elimination periods: These are the number of days beginning with the first day of disability before any benefit is payable. There is usually a 7 day or 14 day elimination period in a disability policy.
- Benefit periods: The duration for which benefits are payable after the elimination period ends. Plans often include choices such as 13 weeks or as much as 26 weeks. Benefit periods beyond 26 weeks generally fall under the Long-
Term Disability coverage. - Benefit Amount: The benefit amount is usually a percentage of income such as 50% or 60% of salary up to a defined maximum monthly benefit. The maximum benefit allowed is often subject to state specific regulations.
Short-
Coverage for Short-
- Pre-
Existing Conditions – usually 12 month time limit - Limits from state regulations
- Injury for which benefits are covered under workers’ compensation
- Employee must be under the regular care of physician during the period after an injury in order to receive coverage
- Intentional or self-
inflicted injuries
Underwriting guidelines also impact the writing of a Short Term Disability. Policies often require a minimum number of employees or a percentage of the eligible employee group, whichever is greater. In addition, minimum premium requirements often apply on disability policies.
Long-
- Elimination periods: These are the number of days beginning with the first day of total disability before any benefit is payable.
- Benefit periods: The duration for which benefits are payable after the elimination period ends. Plans often include choices such as 90 days, six months, one year etc. Some more comprehensive plans include options to age 65.
- Benefit Amount: The benefit amount is usually a percentage of income such as 50% or 60% of salary up to a defined maximum monthly benefit. The maximum benefit allowed is often subject to state specific regulations.
Long-
Contributed with the permission of Jeffrey Schreiber, ARM
Related Group Disability Articles
Protect your income even when you are not working
Why an Individual Disability Insurance Policy Is Better Than Group LTD
Short and Long Term Disability Insurance
Voluntary disability insurance offers income protection insurance that
partially replaces lost income as a result of a disabling non-
accident or illness. The benefit assists in covering ongoing expenses
during a period when no income is available to pay for them. Some of
these covered expenses include:
- Mortgage or rent payments
- Car payments
- Educational Expenses
- Food, clothing and other necessities
- Medical Co-
payments - Medical costs not covered under other plans
- Travel and lodging expenses for treatment
Group Disability Insurance
