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Pros and Cons of Group Disability Insurance

In today’s ultra-competitive job market, companies are searching for new and innovative ways to recruit and retain top talent. No longer is it good enough to offer a good salary, as employees want to work for a company that has their best interests and well-being in mind.

To that end, more and more businesses are beefing up the benefits package that they offer to employees. This includes providing retirement savings plans, health-specific savings accounts, additional time off and flexible work schedules.

One of the recent trends in this realm is companies offering group disability insurance. But, is this a good idea for employers?

Below, we dive into some of the pros and cons of group disability insurance.

What is Group Disability Insurance?

Group disability insurance can be best described as income replacement. If an employee misses time at work due to an illness or injury, group disability insurance will help them to replace a portion of whatever income that they lose.

This helps to ensure that the employee and their family don’t suffer significantly from a financial standpoint as they’re dealing with all the ramifications of their illness or injury.

Typically speaking, these insurance plans have a waiting period, which depends on whether they are short-term or long-term plans. They also might have minimum coverage periods and maximum ages for people to qualify.

Group disability insurance is particularly helpful in states that either don’t provide this coverage or that don’t provide enough coverage to supplement the employee’s entire lost wages.

Pros of Group Disability Insurance

There are many positives to offering group disability insurance.

First, as mentioned above, it helps to separate companies when it comes to recruiting and retaining top talent. Offering supplemental benefits such as this makes a company stand out when someone is considering multiple employers to work for.

Next, these plans are relatively affordable — especially for employees. They typically don’t cost employers a lot of money to offer them to their workers, and many can even shoulder the burden of most, if not all, of the premiums.

Even companies that require their employees to contribute toward the premium won’t be saddling their employees with significant extra costs.

Group disability plans are usually very easy to enroll in. Even people who have pre-existing conditions are likely to qualify for these plans, which removes a lot of headaches and concerns regarding fairness and privacy.

Finally, group disability insurance gives your employees peace of mind. It allows them to take the time off they need if they suffer an illness or injury, rather than trying to force their way back to work before they’re really ready.

In the end, this benefits everyone at your company. Not only will the employees be more productive when they do come back, there also won’t be the threat of an illness spreading, for instance.

Cons of Group Disability Insurance

Like anything, there are some downsides to group disability insurance.

Perhaps the biggest con is that these plans aren’t very flexible, at least compared to individual plans. That’s because they are a one-size-fits-all approach to disability insurance. Everyone gets the same coverage, regardless of whether they might need more.

From an employee perspective, these plans stay with the company. So, for instance, if a worker leaves one company to work for another, they can’t take the group disability insurance with them. It’s a major reason why some employees would prefer to get an individual disability insurance plan on their own, outside of their employer.

In addition, group disability insurance premiums increase the older an employee gets. In some cases, the monthly premiums may not even be worth it. It’s a very personal decision that employees have to make, depending on their own unique circumstances and what would happen to them if they weren’t able to work for a period of time due to an illness or injury.

Finally, many group disability plans have what’s known as “deductible sources of income.” In other words, if you have another source of income such as Social Security that could help pay for your income loss, then your group disability payout could be less than it typically would if you didn’t have that other income.

Beckham Insurance Group Can Help You Decide if Group Disability Insurance is Right for You

Companies today should always be looking for new and innovative ways to attract and retain top talent. One of the most popular and effective ways to do that is by offering expanded benefits packages to employees.

But, is offering group disability insurance to employees a good idea for your business? It’s a question that’s not always straightforward.

If your business is in the Georgia or South Carolina region, Beckham Insurance Group can help you decide if it’s right for you. Our team of experienced professionals will show you the pros and the cons of these plans so you can make informed decisions.

Contact us today to find out more.