Itis possible that at some point in their careers, employees will become disabled and unable to work sometime before reaching the age of 67. But unlike with medical, dental, and vision insurance, very few people know that there are insurance products designed to replace a portion of their income when they become ill or disabled and cannot work.
Disability insurance is, as the name suggests, insurance provided in the event that an employee is disabled and cannot work. Unlike workers’ compensation insurance — which provides benefits such as partial wage replacement if employees become injured on the clock — disability insurance provides partial wage replacement when employees become ill or disabled away from work, and can no longer work. Health insurance benefits allow employees to seek needed medical care. Disability insurance replaces a portion of employee income when they can’t work due to an illness or disability.
Short-Term vs. Long-Term
There are two types of disability insurance:
Short-Term Disability Insurance
Typically pays out a portion of employee’s income from 9-52 weeks depending on the plan. It kicks in after a waiting period, which is usually between 1-2 weeks.
Long-Term Disability Insurance
Picks up where short-term disability leaves off. Long-term disability insurance usually provides about 50-60 percent of an employee’s base wages. Benefits are paid out for the number of years indicated in the plan document.
Why is it Important?
The benefit might act as an additional motivator to attract and retain skilled, talented employees. For example, disability insurance covers part of women’s pay during pregnancy and maternity leave.
Generally, disability insurance doesn’t replace all of someone’s income but provides wage replacement benefits that cover, on average, up to 60 percent of employee earnings. Those payments usually go up to a maximum monthly payout. This is extremely beneficial for your valued employees. Although they won’t recover 100 percent of their wages, it’s still much better than nothing, and that income can make a huge impact for an employee and their family.
If you decide to offer disability insurance, you can let your employees know how important wage replacement can be if they are ever disabled and cannot work. Even though the benefit will not cover the employee’s base wages in full, having some money coming in each month will dramatically help them to continue with their lives, which is why it is such a great offering for your business to hold.
About The Rubin Group
Based in New York, The Rubin Group provides insurance in most of the 50 states. Our full-service insurance brokerage provides insurance and risk management services to individuals in all income brackets and businesses of all sizes and types. We understand that every client has unique coverage requirements, and we are passionate about providing the ideal individualized coverage for each customer. Each member of our team takes the time to truly understand your situation, the particular risks you anticipate – and the very real risks you’ve not yet contemplated. For all of your insurance needs, contact us at The Rubin Group!