Does Your Broker Offer Disability Insurance As a Voluntary Benefit?
If you are a business owner or senior manager, you are well aware of the role employee benefits play in recruiting and retention. You are also probably aware of the trend toward voluntary benefits. They are what brokers and general agencies are talking about these days. And one option that comes up frequently is disability insurance. Does your broker offer it?
Disability insurance is nothing new. It has been around for a long time. But thanks to the fallout from COVID, it has emerged as one of the more important voluntary benefits among workers who suddenly fear illness or injury could keep them out of work for extended periods of time. Disability insurance is a way to protect themselves.
Employees can purchase their own disability insurance on the individual market. Many do. Purchasing it through an employer as a voluntary benefit generally means getting good coverage at a lower cost. That is because employers represent groups, and groups get lower rates because of volume.
What Disability Insurance Does
Disability insurance isn’t difficult to understand. Dallas-based BenefitMall, a general agency specializing in employee benefits, explains it simply enough. They say disability insurance replaces lost income in the event an employee is kept out of work due to injury or illness. There are two types of disability insurance:
- Short-Term – Short-term disability insurance is intended to replace lost income for limited amounts of time. Six months is usually the maximum, though there are exceptions to that rule.
- Long-Term – Long-term disability insurance is just the opposite. It replaces income for longer stretches of time. In some cases, long-term policies pay benefits for the remainder of a covered individual’s life.
In most cases, disability insurance only replaces a portion of the insured’s lost income. It is rare to find policies that cover 100%. A benefit that generous would make disability insurance too expensive for many people. At that point, it is not worth buying.
Private vs. Government Disability
A major appeal of private disability insurance is its more generous benefits compared to government disability. For starters, employers can choose disability policies that pay a higher percentage of an employee’s lost income. Government benefits are pretty limited in this regard. But more important is what employees must do to prove eligibility.
Collecting government disability requires proving that the disabled employee cannot do any meaningful work to earn a living. A roofer who injures his back and can no longer work on roofs would have a challenging time being approved for government disability if he is capable of working in the office preparing customer quotes.
The fact that the covered worker can no longer do what he was doing at the time he was disabled makes private policies more likely to pay him. This makes sense, especially on a short-term basis. We would not expect a worker out for six months because of surgery to try to find another job temporarily.
A Benefit with Peace of Mind
As a voluntary benefit, employers can absorb the entire cost of disability insurance or pass it on to employees. Regardless of the choice, disability insurance is a voluntary benefit that offers peace of mind in addition to replacing lost income. In the wake of COVID, it is peace of mind a lot of people are searching for.
If you are a business owner or senior manager who works with a broker to secure and maintain benefits, ask about disability insurance. Offering this option as part of the voluntary benefits package you provide could make you a hero in the eyes of your employees.
