Individual/Group Disability Policy Alternatives

Individual/Group Disability Policy Alternatives

Individual policy
Description Conditions Advantages Disadvantages
A policy you buy through your insurance agent that pays you disability benefits when you are sick or injured You must meet the underwriting criteria set by the insurance company for occupation, health, habits, avocations, etc.
  • Benefits are tax free if premiums paid with after-tax dollars
  • Flexible policy benefits and features such as lifetime benefits, cost-of-living increases, partial benefits, etc.
  • Provides the most comprehensive coverage
  • Premiums generally can’t increase
  • Generally, you can’t lose coverage if you pay the premiums
Most expensive type
Group policy issued through an employer
Description Conditions Advantages Disadvantages
A disability benefit you receive through your employer; your employer may or may not pay part of the premiums You have to be a member of the group (in this case, a group of employees) that sponsors the insurance
  • Low group premium
  • Available as short- or long-term coverage (or both)
  • Usually, you don’t have to prove insurability
  • Less flexible benefit design than individual disability policies
  • Will terminate when employment ends (non-portable)
  • Premium will increase as you get older
  • Definition of disability may be less liberal than individual coverage
  • Benefits will be offset by Social Security, workers’ compensation, and some other types of disability insurance

Group policy issued through an association or organization
Description Conditions Advantages Disadvantages
A disability policy purchased through an association or organization, such as the New Hampshire Realtors Association You must be a member of the group that sponsors the insurance (in this case, a trade association or organization)
  • Low group premium
  • May have more liberal underwriting requirements, although not guaranteed acceptance as with employer groups
  • Less flexible benefit design than individual disability policies
  • Definition of disability may be less liberal than individual coverage
  • Contracts may be cancelable by insurance company or association
  • Premium will increase as you get older

 


IMPORTANT DISCLOSURES

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax and legal professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

This communication is strictly intended for individuals residing in the state(s) of PA. No offers may be made or accepted from any resident outside the specific states referenced.

 

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017