What are the Basics of Group Disability Coverage?

Some companies and associations offer group disability income insurance as an employee benefit. We'll discuss here the basic principles of this kind of insurance.

Terms of Coverage

An employer or association usually provides group disability income insurance as a benefit to employees and members. Therefore, the insurance is often contingent upon employment or association membership.

Taxable Income and Benefit Limit

Often the employer will pay the premiums for employer-sponsored disability income insurance, so benefits received from the plan are considered taxable income.

Another drawback of employer-sponsored disability income insurance is the way benefit amounts may be determined. Usually, these plans only cover a portion of an employee's base salary.

Defining Disability

A critical component of disability income insurance is how the insurer defines disability, because this affects how and when benefits are paid.

"Own occupation" definitions of disability provide insurance protection for individuals who incur a disability, which prevents them from performing the material duties of their own occupation. Some association group disability plans offer insurance protection with this definition of disability.

Conversely, some employer-sponsored group plans will narrowly define disability or impose other restrictions upon the receipt of benefits.

Therefore, it is important to secure disability income insurance that defines disability in a way that best fits your need for income protection.

Wisconsin State Bar members, visit wisbar.org for more information on our long-term disability insurance plans that are endorsed by the State Bar.

Contact us to discuss your need for disability income insurance today!