Overview: Disability Income Insurance

In terms of employee benefits, nothing is more important than disability insurance.  When an employee can not work due to an accident or illness Disability Insurance will continue to provide them with an income stream.

Recent surveys indicate that a significant portion of working Americans are living paycheck to paycheck with little or no emergency savings.  And, it’s not just low-income households either.  A sizeable number of “wealthy” households are living paycheck to paycheck too.  While these households are not actually poor and own assets ($50,000 on average), they lack liquidity as their money is tied up in things such as cars, houses, retirement accounts they can’t easily access when times get tough.

Think about that for just a minute. How many of your employees could lose their income because they were injured or became ill 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 and unable to work.

Estimate of American Households Living Paycheck to Paycheck

Provide Employees with Top-Quality Disability Benefits

Offering Disability Income Insurance to your employees is not only a smart move but also a great way to enhance your employee benefits package.  It helps you:

  • Help your employees achieve financial security
  • Reinforce employee job satisfaction
  • Build positive relationships with employees
  • Attract and retain your top talent

Innovative and Flexible Solutions

  • Group Short-Term Disability
  • Group Long-Term Disability
    • A great inexpensive foundation of long-term income protection for employees.  Note that the most common plan designs typically do not provide enough benefits for your highly compensated employees.
  • Individual Disability Income (IDI)
    • IDI plans are written on top of Group Long-Term Disability plans to protect a greater portion of your higher compensated employees incomes.
  • High Limit Disability Insurance
    • For employees, owners or partners who earn more than a Group Long-Term Disability and IDI plan can adequately protect, a High Limit Disability Plan can provide the remaining protection.
  • DI Retirement Security
    • Allows employees to continue saving for retirement in the event of a disability.

Broad Reach Benefits will provide your company with a plan specifically tailored to your employees. Plans are designed 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: Benefits Broker

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 That Employees Wish to Purchase
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.

Do Employees Have to Answer Medical Questions?
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 for the Insured
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 Disability Benefits Paid?
There are many plan design options available. Our most popular plans pay benefits through age 65.

Rehabilitation Benefits
In order to help people return to gainful employment these plans provide a variety of rehabilitation programs.

Portable Disability Benefits
Employees may convert coverage to an individual policy if they leave your employment. This is especially important for insured with medical conditions.

24-Hour Coverage
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.

Short-Term Disability

The plan provides a weekly benefit to covered employees who become disabled due to an injury, sickness or pregnancy.

Employer Choices
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.

Typical Disability Benefits Features:

  • 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.