For many employees, fall signifies open enrollment in employer-sponsored benefit plans. Some employers offer group disability insurance to employees to provide protection against loss of income during the time of a disability. Approximately one third of employers offer disability insurance.
Disability insurance is designed to provide income when an individual is unable to return to work and experiences a drop in income. ConsumerReports.org recommends that employees take advantage of this benefit if it is offered by employers, as it can be valuable.
Bill Baldwin, president of Pillar Financial Advisors in Waltham, Mass., was quoted as saying, “Disability is more likely to occur than death in any one year." The chances that a professional, executive or white-collar worker will be disabled for 90 days or longer at some point between the ages of 35 and 65 is 27 percent for men and 31 percent for women, according to a Seattle consulting firm, Milliman.
Some employers will fully pay for group disability coverage. Other employers may fund a basic plan and give employees the opportunity to purchase supplemental coverage. Ginny Stanley, a principal at REDW Stanley Financial Advisors in Albuquerque, New Mexico says, “Sometimes the employer-provided coverage isn't enough to cover family needs when long-term disability strikes."
If your employer offers group disability insurance, you have the option to purchase that coverage or look for an individual policy. A policy you purchase on your own may have easier guidelines for approving disability benefits and the coverage will stay with you, even if you switch jobs. However, if you are older or have health conditions, an individual policy may be expensive.
You can get more coverage from your disability insurance policy by paying the premiums with after-tax dollars. That way, any disability benefits you receive will not be subject to income tax and you will be able to maximize the amount that will be paid to you, if you become disabled.