Disability Insurance
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What is Disability Insurance?
Disability Insurance ensures a continued source of income for your employees if any of them suffer a debilitating injury and lose their ability to work.
If you have Disability Insurance, your injured or sick employee will receive a portion of their income if they lose their ability to work due to an non work-related illness or injury.
Not to be confused with Workers’ Compensation Insurance, which provides covers for a work-related illness or injury.
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What Disability Insurance Is All About:
What Does Disability Insurance Cover?
Frequently Asked Questions
What’s the difference between short term and long-term Disability Insurance?
Short-term disability provides coverage after sick leave runs out, and usually has a short waiting period of a week or less. Depending on the plan, it usually lasts less than a year.
Once that is exhausted and the employee is still unable to work due to a disability, then long-term disability will kick in. Long-term will last until retirement age if needed, or if the employee returns to work or is no longer disabled.
Who Is Covered by Disability Insurance?
Your Employees If they are unable to work due to an injury or illness that is not work related, disability will allow them to still obtain wages, and keep their family afloat.
Your Business While there is no direct coverage for your business under disability insurance, providing this extra coverage to motivate good employees will protect your business in the long run.
What are the benefits of Disability Insurance?
The biggest benefit of disability insurance is providing your employees with peace of mind in case they should become injured and can not work for some time. Since it replaces a portion of their income, they can continue to help support themselves and their families.
What Are the “Limits” on a Disability Insurance Policy?
Short-term disability benefits are typically paid from three to six months after an accident or illness that makes an employee unable to work. Long-term disability benefits can be extended for years, however they won’t apply once the policyholder retires or reaches age 65.
Disability benefits are usually limited to 60 percent of the employee’s wages from the previous year.
What Does Disability Insurance Not Cover?
Work-related injuries Disability Insurance does not cover work-related injuries. It’s important to note the distinction between it and Workers Compensation Insurance.
While Workers Compensation Insurance covers your employees for accidents that occur on the job and work-related illnesses, this type of insurance covers employees who are incapacitated due to accidents, injuries and illness that happen outside of work.
Mental and nervous disorders Mental and nervous disorders are also often excluded from disability coverage.
What is the definition of “disability"?
There are two parts to the definition of "disability":
- “Own occupation” coverage provides benefits when the disability means that employees aren’t able to perform their current job even if they could do something else. This is preferable from an employee standpoint.
- “Any occupation” coverage, which only offers benefits when an employee is disabled to the point of not being able to work at any job, period. Read the fine print and determine which type of coverage is best for you.
Does workers’ comp pay more than disability?
The payout from Workers compensation insurance will usually be less than that for short-term disability insurance (roughly 66 percent of pay vs. 80 percent of pay).
However, it pays a similar percentage to long-term disability but for a shorter length of time (unless the employee is declared permanently disabled). A CoverWallet agent will explain this in more detail.