| Are you covered by a group long term
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| | occupation for two years. After that, if
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| disability insurance plan at work? How
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| | you can sell pencils on the street, the
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| likely is the policy to pay? Learn where
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| | insurance company will not pay.
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| the holes are in your coverage and why an
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| | Certain occupations can be covered
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| individual disability insurance policy is
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| | forever by individual policies. For
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| better.
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| | example, if a urologist becomes disabled
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| Millions of people are insured by group
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| | to the extent he or she cannot practice
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| long term disability plans. However,
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| | the specialty of urology, but could teach
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| there are drawbacks to this coverage and
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| | urology at a medical school, the
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| situations where the policies will not
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| | individual policy would continue to pay
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| pay. Unfortunately, many group plans do
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| | the disability benefits. Moreover, the
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| not pay for the type of disability that
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| | doctor would receive both the individual
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| is most likely to occur. Theoretically,
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| | policy disability benefits and the
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| you are covered. But are you?
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| | medical school teaching salary.
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| Let's contrast some of the more important
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| | Presumptive Disability
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| contract provisions in a group LTD plan
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| | Disabilities that are "presumptive" are
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| and an individual policy. You can come to
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| | those where the insurance company will
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| your own conclusion.
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| | pay the full benefit even if the person
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| Can the Coverage Be Cancelled?
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| | is fully employed. Examples are the loss
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| Group LTD plans can be cancelled in two
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| | of use of two limbs, loss of sight,
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| ways. First, the insurance company can
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| | hearing or speech. A person who is in a
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| cancel the plan if their claim experience
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| | wheel chair because they lost the use of
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| is bad. Second, your employer could
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| | their legs in a car accident is a typical
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| decide to terminate the plan at any time.
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| | example. This is a benefit provided by
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| If a company can downsize, it certainly
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| | individual policies, but not by group LTD
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| can curtail benefits.
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| | plans.
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| When you buy an individual disability
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| | Partial Disability
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| insurance policy, the insurance company
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| | This is the most important distinction
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| can never cancel the policy. You alone
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| | because over 70% of the claims filed at
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| decide when you want to coverage to stop.
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| | insurance company home offices are for
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| Can Premiums Be Increased?
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| | partial disability. The person is not
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| If the insurer sees an increase in
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| | completely unable to work. Their
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| claims, it will raise the premium on a
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| | disability may only allow them to work a
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| group LTD plan. Individual policy
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| | certain number of hours per day and their
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| premiums are frozen for the duration.
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| | salary is adjusted downward accordingly.
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| Portability
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| | An individual plan pays a percentage of
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| What if you change employers? You cannot
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| | the total benefit that represents the
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| take your group plan with you. By
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| | percentage of income lost. For example,
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| contrast, your individual disability
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| | if a person making $5,000 a month with a
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| income plan is completely portable since
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| | $3,000 a month individual policy benefit
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| it is not tied to any company employer.
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| | loses 60% of their income due to a
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| Today, the average person will change
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| | disability, the policy would pay 60% of
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| jobs 7 times during their career. There
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| | $3,000 or $1,800. Most group plans do not
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| is no assurance that each employer will
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| | pay for a partial disability.
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| offer a long term disability plan.
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| | Conclusion
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| Taxation
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| | You have seen that group long term
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| Group long term disability benefits are
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| | disability income plans can be cancelled,
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| taxable just like income. Individual
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| | premiums waived and lack portability.
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| policy benefits are 100% tax-free.
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| | Benefits are taxable and are offset by
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| Offsets
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| | other plans. They posses no ability to
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| Group LTD benefits are reduced by the
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| | protect an occupation and, most
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| amount of benefits received from Social
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| | important, most do not pay for the type
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| Security, Workers Compensation, state
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| | of claim most likely to occur: partial
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| cash sickness program, etc. Individual
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| | disability.
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| policies have no offsets.
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| | Individual disability insurance plans do
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| Own Occupation
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| | not have these limitations. They cost
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| Individual policies have the ability to
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| | more, but when it comes to disability
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| protect the individual in his or her "own
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| | coverage, you get what you pay for. If
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| occupation." Typical wording for the
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| | you get in an accident or develop a
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| definition of disability for group LTD,
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| | sickness that inhibits your ability to
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| as it pertains to occupation, goes
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| | put food on the table, your thoughts are
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| something like this: "For the first two
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| | not focused on what the premium is for
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| years, the inability to perform each and
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| | your disability income insurance
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| every duty of your occupation; after two
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| | coverage. You simply want to know when
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| years, the inability to engage in any
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| | your disability check will arrive in the
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| gainful occupation."
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| | mail.
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| This means you are covered in your
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