Group Disability Insurance

Includes short and long-term disability insurance.

Solving the Disability Dilemma

Disabilities are becoming increasingly common in today’s Canadian workforce. These disabilities are often caused by accidents that occur outside of the workplace.

Although benefits such as dental and vision care are more immediate, protecting employees from the financial burden associated with extended disabilities or illnesses are equally important, especially in dangerous or high-risk industries. While certain healthcare-related expenses may set an employee back slightly, losing income for a longer period of time can have a more profound effect on their finances.

What is Disability Insurance and what does it cover?

First thing’s first, what exactly is disability insurance?

A disability insurance plan is a form of insurance coverage that pays out in the event that you suffer a disabling injury or illness. It is acts as financial assistance given out when an injury prevents the recipient from working. This differs from worker’s compensation in one critical way.

While employee compensation can only be filed for injuries that occur during work, disability insurance covers any injury that prevents you from working.

Disability Insurance Coverage

Insurance policies offer a lot of potential add-ons and riders. Before buying any type of policy, it’s best to familiarize with some of these policies and what they do. Here are just a few of them:

  • Own Occupation: This rider ensures that you will get benefits if you are unable to work in your usual profession. This means that you can’t be denied because you technically could work in some professions.
  • Future Increase: This rider allows you to invest more into your insurance plan so it pays out more should you suffer a disabling injury or sickness later on.
  • Lifetime Extension: This means that your benefits won’t stop if you reach 65 years of age or retire.
  • Accidental Death Benefit: This rider makes it so that if an injury or illness kills you, or even lose your eyesight, hearing and limbs, your loved ones will receive a higher payout.
  • Automatic Benefits Increase: This rider causes your coverage to rise as your salary does. Keep in mind, this doesn’t necessarily have to do with the cost of living. Simply put, higher-paying jobs will provide more insurance.
  • Cost of Living Adjustment: This means that your coverage will increase as rent and other prices do so that you don’t find yourself needing more than you’re getting paid.

Why should I get Disability Benefits for my employees?

First, let’s answer the pressing question: are you required to offer disability benefits to your employees? Technically speaking, no, you’re not legally obligated to offer disability insurance.

So, should you offer disability benefits to your employees?

First, it depends on how many employees you have. If you have less than ten, a group plan may be too expensive to be worth the trouble.

If you have more than ten, then it may be worth investigating your options for coverage.

Group Disability Insurance Advantages

There are a variety of advantages to group disability coverage if you choose to go that route. Such as flexible plan options, lower than individual rates and much more user-friendly premiums.

Providing your employees with disability insurance helps them stay afloat while they are unable to work for an extended period of time. Group disability insurance replaces up to 70% of their regular income and helps to cover the sometimes hefty expenses associated with treatment, equipment and recovery from their ailment(s).

Lastly, offering disability coverage as a benefit for employees makes you more attractive as a workplace. You’ll be able to attract better employees in the future.

What are the different types of Group Disability Insurance?

There are two types of group disability benefits:

Short-Term Disability

This type of insurance is designed to protect an employee from any loss of income incurred by an accident, illness or injury that temporarily prevents them from working. The policy provides the employee with a percentage of their income to help manage expenses. It does not, however, provide coverage for accidents that occur within the workplace; these are typically covered by workers’ compensation insurance instead.

Long-Term Disability

Like its short-term counterpart, this policy also provides employees with protection in the event of accidents, illnesses or injuries. The main difference is that it is designed to cover an extended absence from work. Employees with long-term disability insurance generally receive between 60 and 70% of their regular income.

Both types of group disability insurance are comprised of four key components:

  • Benefit period – The benefit period is the amount of time in which long-term disability benefits will be paid for. The plan can be set up with two or five years of coverage, or a benefit period that lasts up until age 65.
  • Benefit maximum – The benefit maximum is determined by the size of the group receiving the benefits and the nature of the business. There are two types of maximums: non-evidence maximum and overall maximum.
    The non-evidence limit is the limit of insurance the insurance company will cover without evidence of good health. The larger your group, the larger the non-evidence limit will be. If your group requires a higher limit of insurance, each eligible employee will be required to show proof of good health. The overall maximum is the maximum amount of insurance the insurance provider will cover.
  • Benefit schedule – The benefit schedule is the formula used to calculate long-term disability benefits. The amount of long-term disability benefits is usually calculated by a percentage of the pre-disability monthly earnings of the employee. The percentage of the pre-disability monthly earnings eligible for coverage varies and can be modified to meet the needs of the business and its staff.
  • Elimination period – The elimination period is the waiting period that disabled employees must complete before receiving long-term disability benefits. This group plan can be set up with elimination periods of 105, 119 or 180 days. The elimination period options often vary based on the insurance provider.

Where can I get Group Disability Insurance plans?

Group Disability Policy is available from most licensed insurance brokers, who can also provide you with helpful information about other types of employee benefits. You can also get a FREE quote today (by clicking the button above) to get a better picture of the employee benefits landscape and find a plan that aligns with the needs of your company and its employees.