Recruiting and maintaining great employees is not easy for most medium-sized and small businesses. A recent study revealed that the average cost of replacing an employee is 33 percent of the worker’s salary.

The worst part comes when your reliable employee is injured or gets sick. How will you be able to protect your business’s interest and ensure that things get back to normal as soon as possible?

Proving group disability insurance can be a great solution. Find an experienced insurance agent and find out more information about group disability insurance.

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Understanding group disability insurance

A group disability insurance is an important cover provided by some employers. The insurance covers are popular because of their cost-effective nature. All employees are usually eligible for this type of insurance.

With a group disability insurance policy, employees can receive monthly benefits when they cannot work because of illness or injuries.

However, an employee will have to prove to the insurance company that they cannot work because of the injury.

There are basically three things the insurance company will seek to know:

  • Is the employee under a doctor’s care
  • Is the employee unable to work because of injury or illness?
  • Is the employee receiving any income from his or her employer?

The disability insurance company will process or fail to process the benefits based on the answers to the above questions.

Difference between group disability insurance and individual disability insurance

In simple terms, individual disability insurance is bought privately. The underwriting process will require a medical exam to be carried out to purchase the policy to determine the premiums.

On the other hand, the employer normally purchases group disability insurance as an employee benefits package. The good thing about this type of cover is that there isn’t an underwriting process for the applicants.

Why should employers provide group disability insurance?

It is difficult to ignore the risk of employee disability during the employment period. A 28-year old lady has a 28 percent possibility of getting disabled within her period of employment. This poses a great challenge for both the employer and employees.

While employees will have to grapple with getting better and get back on their feet, the employer or business will have to deal with workload and payment issues. For how long will you pay an employee who is not productive?

As much as the business will want to do everything possible to help the employee recover and come back to work, some cases are beyond control. Besides, it can be financially draining for the business.

A group disability insurance cover is essential because it protects the income of all employees. By protecting employees’ income, the business is also protecting itself in numerous ways.

There are basically two plans – short term and long term. In both insurance plans, the employer may cover the premiums or share the cost will employees.

  • Short term group disability plan: A short term group disability cover pays employees 60 to 70 percent of their salary for a period not exceeding one year. The insurance company will normally start processing the benefits 14 days after an employee has been injured or fallen taken ill. The insurance policy covers recoveries from surgery, pregnancies, plus other common ailments. The employer’s long term disability policy pays employees after they recover from illness or injury.
  • Long term group disability insurance: A long term group disability cover pays a certain percentage of the worker’s salary. It is the employer who determines the amount of benefit an employee receives. Normally, an employee will start getting the benefits at least 90 days after the incident was reported. The employee will get the benefits for two or more years – depending on the insurance cover terms. Most employers offer group disability insurance as bait to maintain employees. If you provide this type of cover to your employees, it is important to educate them on disability risks.
  • Voluntary plans: These are group disability insurance available for both short term and long term covers. An employee has the option of taking part and paying the premiums on their own. One advantage of voluntary plans is that they are exempted from tax.
  • Employee assistance programs (EAPS): These are programs that offer support to employees facing different challenges such as addiction. Family crisis, depression, among others.
  • Emergency Travel Assistance (ETA): ETA pays for medical bills and emergency evacuation.
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What is the cost of group disability insurance?

Most insurance companies determine the price of premiums based on the following factors:

  • Type of the insurance plan
  • The number of workers
  • The amount of coverage being offered
  • The type of business

One important thing to note is that the premiums in a group disability insurance cover are lower than an individual cover.

An employer can talk to the insurance company to work out the best coverage according to the organization’s budget and needs.

Is there group disability insurance for the self-employed?

Small businesses can provide group disability insurance. Insurance companies provide small groups of disability insurance covers for even two individuals. However, the plans may have several limitations in terms of benefits and options.

What is a professional firm group disability insurance?

This is where professional bodies or companies group disability covers to their employees and partners. For instance, if your business or company is professional, then you can consider executive plans.

An executive disability policy is designed to cover high-value investors, partners, and employees.

Every person with the cover is given their own policy with a lot of monthly benefits. Besides, the insurance company won’t demand normal medical examination and other details.

Are group disability plans taxed?

The answer is yes, and no. Taxation depends on who is paying the premiums. If it is the employer who pays the premiums, then the employees’ benefits will be taxed.

On the other hand, if the employee pays the premiums, then the benefits won’t be taxed.