It has been stated that 48% of all home foreclosures are due to disability1
. Think about that for just a minute. How many of your employees could lose their income for six, twelve, eighteen months or longer and continue to pay the monthly bills? Even dual income families could not survive long if one income earner was disabled.
Disability coverage will provide the income when an employee can not work due to an accident or illness.
Broad Reach Benefits will provide your company with a plan specifically designed for your employees. Plans are tailored to integrate with your salary continuance policies and/or any state benefits. Best of all, these plans are available as employer paid, contributory or 100% voluntary. Voluntary plans require no employer contributions, have very low participation requirements and are guaranteed issue for all your employees.
Long Term Disability Programs provide income after either three months or six months of disability. This benefit could continue through age 65 or normal Social Security retirement age. Below are a few of the key points of Long Term Disability plans:
Amount of Coverage
One of the unique characteristics is that each employee can determine the amount of coverage they wish to purchase. Employees can have a minimum monthly benefit of $500 up to a maximum of 60% of their base compensation. This provides the employee with the flexibility to purchase only the coverage they feel is appropriate for their situation.
Employees who enroll during their open enrollment period do not have to answer any medical questions. Coverage is issued on a guaranteed issue basis.
Tax Free Benefits
Benefits are paid tax free to the insured. Even though premiums for long term disability can be included in a Section 125 plan it makes very little sense to do so. If the premiums are paid with pre-tax dollars then the benefit becomes taxable when paid.
How Long Are Benefits Paid?
There are many plan design options available. Our most popular plans pay benefits through age 65.
In order to help people return to gainful employment these plans provide a variety of rehabilitation programs.
Employees may convert coverage to an individual policy if they leave your employment. This is especially important for insured with medical conditions.
These plans provide 24 hour coverage for disabilities resulting from accidents, sickness or pregnancy. Some employers specifically request non-occupational coverage only, which is of course available.
Two-Year Rate Guarantee
Our most popular programs come with a two-year rate guarantee. This also makes budgeting more comfortable for your employees.
The plan provides a weekly benefit to covered employees who become disabled due to an injury, sickness or pregnancy.
Choose the benefit commencement date to coordinate with salary continuance either the eighth or fifteenth day of disability. Then, choose the duration of the benefit- either 13 or 26 weeks.
• Disability benefit equal to 60% of an employee’s pre-disability earnings, to a maximum of $600 per week (higher total benefits and maximums available).
• Dual definition of disability ("own occupation" or 20% or greater loss of income).
• Partial disability benefits.
• Guaranteed issue (No medical questions).
• 100% return to work benefit.
• Rehabilitation benefits.
Definitions of Disability
One of the most important features in disability contracts is the actual definition of disability the insurance carrier uses. One good example is the "dual definition" below used by one carrier in determining disability:
• Occupation Test You are considered disabled if an injury, sickness or pregnancy requires that you be under the regular care of a physician and attendance of a physician and prevents you from performing at least one of the material duties of your regular occupation.
• Earnings Test You are considered disabled if an injury, sickness or pregnancy prevents you from earning more than 80% of weekly pre-disability pay, even if you are working full time and performing all of the duties of your regular occupation.
Notice that under the Occupation Test above the definition for disability states "prevents you from performing at least one of the material duties" as opposed to "prevents you from performing the material duties".
Disability insurance can enhance the value of your employee benefit portfolio by providing your employees with income protection. Of all the programs we offer at Broad Reach Benefits, Long Term Disability is clearly one of the most important benefits.
1 National Underwriter, May 2002
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