Group Disability

A group disability insurance policy covers a group linked by an employer, trade association, school, etc. Benefits are paid to replace earnings lost due to accident or sickness. Premiums may be paid for by the individual, organization, or both.

Generally, the cost of group coverage is less expensive than the cost of individual coverage. Group policy benefits typically are paid for a limited period of time, with the maximum income benefit rarely greater than 50-60% of earnings.

Group policies can vary widely. For example, some policies cover both non-occupational and occupational illnesses and injuries, while others do not. A policy may cover short term-disabilities, long-term disabilities, or both. Additional factors to keep in mind are: eligibility, how long you have to wait before benefits begin, the dollar amount that will be paid, and for how long benefits will be paid (benefit period.)

Short-Term Disability (STD)
STD policies tend to have short elimination periods of 7 days, and typically provide benefits for 13 to 26 weeks. In most cases, maternity is covered the same way as any other disability.

Long-Term Disability (LTD)
There are times when an injury or illness will render an individual unable to perform the essential duties of his or her occupation for an extended period of time. Long-term disability insurance offered through your employer is a start, but group disability benefits often cover only about 60% of your income.

The Impact of Disability While most Americans insure their lives and physical possessions such as their homes, cars, etc, many overlook the need to protect their most valuable asset- the ability to earn an income.

How likely is it that someone will become disabled? The table below developed using data collected by the federal government shows the number of working-age Americans who have a disability that affects their daily lives.

Individuals with Disabilities by Age (1)

Age Range No Disability With a Disability 5-15 Years 94% 6% 16-20 Years 93% 7% 21-64 Years 87% 13% 65-74 Years 70% 30% 75 Years and over 48% 52%

The following graph displays the problem typically faced by an individual who becomes disabled for an extended period of time – expenses increase while income decreases at a rapid rate.

** --- The red line represents the point in time where disability strikes.

(1) U.S. Census Bureau, 2005 American Community Survey. Table B18002, sex by age by disability status for the civilian non-institutionalized population 5 years and over, male and female.