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Group long-term disability vs. individual disability insurance

Key points to look at when comparing group and individual plans
Is the benefit taxable to me during a claim?

Is the premium guaranteed level to age 65?

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Is a mental and nervous claim paid to age 65 or limited to two years?

Does the policy cover me in my own occupation, and for how long?

Will the policy pay me if I can not work in my occupation but am working in another field?

Does the policy offer inflation protection and the ability to add benefit to my policy as my income increases?

Can the policy be cancelled by the insurance company?

 

You may be asking yourself, "Should I enroll in my group disability plan or purchase my own individual disability plan?" The pros and cons of both need to be considered thoughtfully before deciding what is best for you. There are three likely outcomes from this analysis: You will enroll in the group plan, you will buy an individual plan, or you will buy a group plan and layer a small individual policy on top of the group plan.

There is no universal right or wrong solution. Every person's situation is unique and will demand its own review.

In general, if your group plan is paid for by your company, you are required to participate. Should you ever have to file a claim, the benefit is taxable income to you in the year it is received. In this case, you would want to buy a small individual disability insurance policy to layer on top of the taxable group plan to get your disability pay out closer to your pre-disability net take home pay.

If you have a group plan offered through your employer, and you have the option to enroll in the plan, look closely at the coverage offered and the cost associated with the plan. Then compare that to what you may be able to secure on your own with an individually owned policy. It is imperative to thoroughly understand all the terms and conditions of the group and individual disability insurance plan options and how they might impact you. Consult a disability professional to help you understand the options and offer a side-by-side comparison to help you understand what is best for you.

If you do not have a group plan offered through work, your only option is to secure an individual disability insurance policy for yourself. Again, consult a disability insurance professional to tailor a plan that best meets your needs and budget.

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