Disability insurance for individuals vs. group disability insurance
With so many options out there, you may get confused with the right disability insurance for you. Most people opt for individual disability insurance because group plans come with a few conditions that make them a tad more challenging to get.
To shed a bit of light on why disability insurance for individuals is the primary choice for most, in this article, we will compare both disability insurance types and explain the advantages of disability insurance for individuals over group disability insurance.
Disability insurance for individuals
Disability insurance for individuals is most common among professions such as surgeons, artists, and similar “white collar” jobs where a potential disability could deem the person unable to continue working in the same occupation for the long-term. These plans come with a higher premium, and the most significant benefits the individual would get, which are considerably higher than a group insurance plan would offer.
Group disability insurance plans
Disability insurance for individuals may be out of the budget for many, but there are group insurance plans usually offered by the employer and can provide the coverage employers need.
Of course, these plans differ depending on the type of insurance you are to get, short-term disability insurance, or a long-term one.
The Advantages of Disability insurance for individuals
A group plan may not provide enough in benefits
The number one reason why so many people get additional disability insurance for individuals is that it allows for the extra coverage for workers that have become disabled and can’t work for a while but find the employment insurance coverage insufficient.
In general, group disability insurance provides around 60% income coverage in case of a disability, which is often not enough to cover your monthly costs. The added expenses raise the need for an additional income that will supplement the previous plan and fill the gap between what you need and what you get during the disability.
You can lose coverage with a group disability policy
The biggest flaw of a group disability insurance policy is that it’s possible to lose your coverage as a result of:
- Losing your employment with the current company
- The plan may not be renewed after an annual review
On the other side, though, you cannot lose your disability insurance for individuals. It will stay in your name as long as you pay the premiums and doesn’t depend at all on your employment or group policy.
Another area where group disability plans lack is the optional riders. Disability insurance for individuals usually allows you to customize the features to fit your insurance needs, something that doesn’t come with group plans.
Some of the valuable optional riders that don’t come with group disability insurance plans are:
- Residual disability rider
- Future increase rider
- Cost-of-living adjustment (COLA) rider
Just the thought of becoming disabled is terrifying, but there is a possibility of that happening at some point in your life. In fact, 25% of individuals will experience some disability during their working life, and the percentage is proportional to the individual’s age.
This is one of the reasons why it’s essential to have disability insurance as soon as possible in your career. It doesn’t only save money in the long term, but you will also have greater protection and feel safer throughout your working life.
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