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Differences Between Individual and Group Disability Insurance

Pittsburgh disability lawyers know the differences between individual and group disability insurance.By purchasing disability insurance, employees can protect themselves from financial worries should they suffer a long-term disability resulting in their inability to work. Unlike Workers’ Compensation insurance, most long-term disability insurance policies cover the loss of future wages for medical conditions that are not work-related. Some workers face the choice of obtaining either individual or group disability insurance. Understanding the differences between these two types of insurance is important in deciding which insurance coverage is right for each worker.

Obtaining Disability Insurance

One of the most basic differences between individual and group disability insurance policies is how a worker can obtain the insurance. Under a group insurance policy, the employer generally provides the disability as a benefit or allows the employer to pay any premiums directly through a payroll deduction with pretax dollars. Group plans provide coverage as a set price based on an individual’s age. In some professions, trade groups, such as the American Dental Association or the American Bar Association, will provide group long-term disability insurance to its members. Group insurance is typically easier to obtain than individual insurance.

Premiums for an individual disability policy are paid directly by the worker insured under the policy to the insurance provider. Underwriters will look at the individual risks for each worker when determining the premiums. For example, individuals who regularly engage in extreme sports, such as snowboarding or rock climbing, may be charged a higher premium than an individual who indicates on their application they prefer more sedentary activities.

Insurance Costs

Group insurance is less expensive than individual disability insurance. Due to the discounted rates associated with bulk insurance purchases, workers may pay significantly less in premiums under group disability policies. Some companies may provide long term disability insurance as a benefit to employees with little or no premium paid by the worker. These lower costs typically reflect less coverage.

Coverage Provided

Individual disability policies will typically cover a wider range of disabilities than group policies. With broader definitions of disability, individual insurance policies often allow for payments if a worker cannot perform their unique occupation. This is not always the case with group insurance, which stops payments after two years if an individual can work in any occupation. Unlike individual insurance policies, payments made under group insurance policies can be reduced by the amount of Workers’ Compensation or Social Security disability payments also received by the worker.

Duration of Coverage

Another important difference between individual and group disability insurance is the ability of an individual to be covered if they switch jobs. While individual disability insurance stays with the individual regardless if they switch employers, group disability insurance will no longer be available to individuals who leave the company. The portability of individual insurance policies can make them very attractive to workers in industries with a high employee turnover rate.

Pittsburgh Disability Lawyers at AlpernSchubert P.C. Help Injured Workers

If you or a loved one has suffered an injury resulting in an inability to work, financial insecurity can cause undue stress. The experienced Pittsburgh disability lawyers at AlpernSchubert P.C. can help you obtain the compensation you are entitled under your individual or group disability insurance policies. Our offices are conveniently located in Pittsburgh to serve clients throughout Allegheny County, Lawrence County, Washington County, and western Pennsylvania. To schedule a free consultation today, call us at 412-765-1888 or contact us online.