Life & Disability Income Insurance

Life Insurance

Disability Income Insurance

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• Employer-Sponsored Disability Income Insurance Benefits

Employer-Sponsored Disability Income Insurance Benefits

Questions employees should ask during open enrollment.

Annual benefits enrollment can present employees with an increasingly complex set of financial decisions each year. As a result, many employees do not sufficiently evaluate available employer-sponsored insurance coverage along with individual coverage to help ensure appropriate levels of protection in the critical area of disability income insurance.

Five key questions about employer-provided disability income coverage

• Would you lose your employer-sponsored disability income insurance coverage if you switched jobs or became unemployed? Employer-sponsored coverage may not be portable. Individual disability income insurance provides coverage during a job change or unemployment, thereby helping to protect your financial future during uncertain times.
• Would your income from an employer-sponsored policy during a disability be less than anticipated because it’s integrated with Social Security or other benefits? Employer-sponsored disability income insurance benefits are usually reduced by Workers' Compensation or Social Security benefits. The qualifications for Social Security disability income are typically stringent, and the payments tend to be modest. In contrast, individual disability income insurance typically pays benefits in addition to any benefits payable under Social Security.
• Does your employer-sponsored disability income insurance cover only your base income/salary, or does it also include commissions and/or bonuses? Group coverage typically replaces 60 percent or less of base salary, which can leave a large amount of income from bonuses and commissions unprotected. Individual policies give the option to cover these other sources of income so that you can protect more of your actual earnings.
• Does your employer-sponsored disability income insurance have strict definitions of what qualifies as a disability? It is important to determine how a policy defines disability. Some will pay benefits if you are unable to perform the duties of your regular occupation, while others pay only if you are unable to engage in any gainful employment. Typically Workers’ Compensation covers only work-related disabilities, while a majority of disabling accidents and illnesses aren’t work related.
• Does your employer-sponsored disability income insurance provide the adequate stability and protection that suits your needs? Individual disability income policies will typically offer longer maximum benefit periods, include non-cancelable features, cost-of-living adjustment riders and the option to purchase additional coverage. These add-ons are usually not available from employer-sponsored disability income plans.

Often people don't realize that employer-sponsored coverage is not enough. While everyone should take advantage of the low-cost, basic coverage often available through an employer, most should also combine it with individual insurance protection. A financial professional can help you understand what combination of protection will meet your individual financial goals and needs.