Group disability insurance is a type of insurance that covers people in the event that they are unable to work because of an injury or illness. This type of insurance is purchased to cover a group of people instead of an individual. For example, group disability insurance may cover a company’s employees or members of a particular group. There are both long-term and short-term policies that fall under the heading of group disability insurance.
Everyone suffers from minor illnesses and injuries from time to time. In most cases, these illnesses and injuries do not require a person to take a significant amount of time off work. When an individual cannot work for a significant period of time, however, he may be considered disabled. In such a case, group disability insurance may pay benefits to the person who is ill or injured. Often, the benefits amount to a percentage of the money a person would have earned during the term of his disability.
Often, group disability is offered as part of an employer’s benefit package. Many employers use insurance and other perks as a way to attract and retain employees. For example, an employer may offer disability insurance along with such perks as retirement accounts and vacation plans. In some cases, clubs and associations may offer group disability insurance for their members as well. Additionally, a person may purchase disability insurance as an individual.
There are both short-term and long-term group disability plans. Often, a short-term disability plan pays benefits for individuals who are disabled for up to a year. A long-term plan often pays benefits for much longer periods of time. For example, one insurance policy may pay for two years while another may pay for five years. There are even some that pay disability benefits until a person reaches a preset age or the jurisdiction’s retirement age.
The amount of monetary benefit a group disability insurance policy offers varies from policy to policy. Some may only pay 50 percent of the person’s regular income while others may pay 70 or 80 percent of the income a person cannot earn because of his disability. Most plans do not pay 100 percent of the disabled person’s income.
The percentage of income a group disability policy is likely to pay usually depends on a number of factors. They include the cost of the insurance, the particular insurance company, and the type of policy that was purchased. The disabled person’s other sources of income during a term of disability may play a role as well.