Group disability insurance is a form of protection for a group of people who are connected in some way – such as through an organization such as a trade association or employer – and covers the individuals from the losses to which they are exposed in the case of illness or an injury from an accident.
Group disability insurance is typically less expensive than a policy purchased by an individual, though it should be noted that the benefits are limited to a maximum monthly income and a certain length of time. Usually its benefits are about 50 to 60 percent of the individuals’ monthly income.
It is common for employers to hesitate when they are deciding whether or not to offer their employees Group Disability Insurance, but there are many advantages to providing this type of program. This protection provides a company and its employees with an income in the case of illness or accident, after a waiting period as short as one day following the accident or eight following the diagnosis of an illness.
Long term disability and short term disabilities can involve a number of terms, many of which apply strictly to group insurance. It is important to understand them before choosing a specific plan. Examples of these can include:
• Active, full-time employee – this is an individual who regularly works for the employer during the usual length of the employer’s business and is therefore eligible for coverage. There are usually a minimum number of regular work hours required for coverage.
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• Conversion privilege – should the plan include this option, it permits employees who are ending their employment with the company to choose to continue their long term disability in full or in part at their own expense without having to provide “Evidence of Insurability”.
• Evidence of insurability – when disability insurance is sold to a group, it is typically done as “guaranteed issue”, which means that no proof is required for insurability. However, in some situations, an employee will be required to provide this evidence by way of medical or financial information to prove insurability to the insurer.