Group Disability Insurance Income

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PostPosted: Mon Dec 14, 2009 7:10 am   Post subject: Group Disability Insurance Income  

Hi, please get me a hint on Group Disability Insurance Income.


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Wrapped-in-Joe
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PostPosted: Tue Dec 15, 2009 5:53 am   Post subject:   

Employees are generally offered coverage at a discounted rate. This discount is worth an amount which they wouldn't have got other wise. This is sometimes the best benefit offered under a group disability plan.


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anonymous00
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PostPosted: Wed Dec 16, 2009 5:16 am   Post subject:   

The premium would be paid by the company. The payments would be deductible for them and the benefits that the employee receives would be taxed.

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PostPosted: Wed Dec 16, 2009 1:25 pm   Post subject:   

Group disability policies are not offered at a discounted rate. The rate is cheaper than individual coverage because it is a different product. It is designed to be inexpensive. This is done via contractual language that makes it more difficult to have a legitimate claim.



Steven, it is usually done as you describe, but not always. If the premium is treated as income to the employee, the benefit would be tax free.


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alrjoamv
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PostPosted: Thu Dec 17, 2009 6:24 am   Post subject:   

Quote:
This is done via contractual language that makes it more difficult to have a legitimate claim.


It seems you've come across such instances before. See if you can quote a couple of tricky clauses that you may have experienced before.

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anonymous00
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PostPosted: Fri Dec 18, 2009 7:49 am   Post subject:   

The company may bear a part of the cost or they may offer bonuses at a fixed percentage on the base salary. This amount could be utilized towards paying off the coverage cost. Some bonuses are so high as to meet the premium as well as the taxes. Roddick

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PostPosted: Fri Dec 18, 2009 10:10 pm   Post subject:   

Quote:
It seems you've come across such instances before. See if you can quote a couple of tricky clauses that you may have experienced before.




There are lots of things. Here a just a quick couple.



1) The definition of disability. You won't find a true "own occupation" coverage in a group policy that lasts until age 65.

2)Any dollars paid from workman's comp/Social Security/etc will reduce the benefit.

3)Partial may not be covered or might require a total disability first.

4)The policies are covered under ERISA which is really bad for the insured because it makes it much easier for insurance companies to reject claims with impunity.

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alrjoamv
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PostPosted: Sat Dec 19, 2009 5:01 am   Post subject:   

alrjoamv, you've really explained things quite realistically. Some people tell me that a critical illness policy could be a better substitute for disability insurance. Do you agree with that?


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anonymous00
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PostPosted: Sat Dec 19, 2009 12:19 pm   Post subject:   

I completely disagree. One can become disabled without being critically ill.


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alrjoamv
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PostPosted: Sat Dec 19, 2009 3:04 pm   Post subject:   

No, CI is not a substitute for DI. Buy individual disability insurance.

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PostPosted: Mon Dec 21, 2009 7:10 am   Post subject:   

Quote:
Buy individual disability insurance.




Absolutely! A majority of the individual policies offer partial benefits that are proportional to your partial income loss. This offer would come to you even when you've never become completely disabled.
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PostPosted: Thu Dec 24, 2009 6:54 am   Post subject:   

There are quite a few benefits attached to these disability policies. The benefits with your group disability won't be there once you leave the organization, but the benefits with your individual plan would be there to support you even when you get a new coverage through your new employer.

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PostPosted: Thu Dec 24, 2009 11:49 pm   Post subject:   

But who says an employer will offer the benefit? You can loose group coverage as well. So, if either you leave your current employer where you are part of a group LTD plan, or your current employer decides to drop the plan, you will then need to purchase individual disability insurance.

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