Group Life & Disability Coverage


 

As an employer, purchasing group life insurance for your employees is an inexpensive way to add significant value to your benefits package. Group policies are usually written with no health questionnaires, and often allow employees the ability to purchase additional life insurance, as well. In addition to benefits for death due to illness, most policies will double the amount they pay if it results from an accident. These types of benefits are extremely valuable, since fewer workers today are purchasing life insurance than ten years ago.

In the event of an employee’s death, the life insurance is paid directly to the beneficiaries. In addition to covering the family’s daily expenses, life insurance can help the beneficiaries maintain their standard of living, pay off household debt, secure children’s education, and supplement retirement savings.

As a part of the benefit package, disability insurance can significantly reduce the financial burden to employees who are unable to work while experiencing a medical situation. Statistically, a 35-year-old person has a 50% chance of being unable to work for a period of more than three months before reaching the age of 65. Disability insurance is there to help replace the lost income while unable to work due to a disabling event. There are two forms of disability insurance:

1.    Short-term disability insurance can replace a portion of income during the initial weeks of disabling illness or accident. It usually has short waiting period (typically 1-30 days) and can last for up to six months. These plans help employees who have short term medical conditions. The most common claim is paid for pregnancy.

 

2.    Long-term disability insurance is for more medical conditions that are more serious and have a longer duration of disability. These plans usually have a minimum waiting period of 90 days, and benefits can last until you receive Social Security Benefits. Long-term disability plans can be designed to be very complex and complete. A full review of the market should be done, and a review of job descriptions is an important piece of the project.

 

There are taxability issues to consider when looking at purchasing employee benefits for your staff. Be sure that you understand who is paying the premium, and what the tax consequence for that will be at the time of a claim.

Contact one of our Group Life and Disability specialists to have a detailed discussion about the benefit of these and other products.