What to Look for in a Disability Insurance Policy
Despite its importance, many employers are not sure what to look for in a disability insurance policy. When people incur injuries that affect their ability to work, protections like disability insurance are in place to keep them afloat. Like other forms of insurance, however, not all disability insurance policies are the same, and it can be pretty challenging to choose one that meets all of your needs. Canal HR can let you know what to look for in a disability insurance policy if you want to protect your business and offer your employees the best benefits possible.
What is Disability Insurance?
Unlike workers’ compensation coverage, which is used for workplace accidents, disability insurance protects individuals who are rendered disabled due to incidents that occur outside of work. These insurance policies can work in instances of both permanent and temporary disabilities. That is where the two types of disability insurance come into play.
As the name suggests, short-term disability (STD) insurance policies replace some or all of an employee’s income lost due to a temporary disability. STD plans provide between 40% – 60% of an employee’s pay and last an average of 26 weeks. That period can increase or decrease, however, depending on the specifics of the case in question. Moreover, STD policies usually have at least a week-long waiting period from the time of injury to when they kick in.STD insurance typically covers things such as:
- Persistent or prolonged illnesses
- Other impermanent disabilities
Contrastly, long-term disability (LTD) insurance covers an employee’s wages when a disability keeps them out of work for a prolonged period, if not permanently. These policies allow employees to recoup between 50% -70% of wages lost while out of work. The length of these policies will vary based on the policyholder’s interests, but tend to last between five years and a decade but can continue as long as the worker remains unable to work due to disability. LTD can cover things like:
- Nervous system disorders
- Autoimmune disorders
- Mental health disorders
How Your Business Benefits From Offering Disability Insurance
Though it is not a requirement in most states, offering employees disability insurance benefits can also benefit the employer. The most qualified talent is going to seek out employers who can offer them the most security. Offering disability insurance will set your company apart in the minds of job seekers and propel qualified candidates towards it. Plus, if the worst does occur to a valued employee, you stand a better chance of retaining the talent when their wages are protected through private disability insurance.
What to Look for in a Disability Insurance Policy
So you know that you can benefit from providing disability coverage, but how should you select a policy? Things to look for in a disability insurance policy include:
An Elimination Period that Works for You
Different policies – long or short term – will have various waiting periods before the coverage starts. For STD insurance, waiting periods can range anywhere from 1-30 days following a report of injury. LTD can kick in anywhere from 10 weeks to a year following the policy. Your employees may prefer a policy that kicks in faster, especially if paid sick days are limited.
Own-Occupation Coverage Availability
Some policies out there will pay out fewer (or no) benefits for an employee who can work any job while they are hurt, even if it wasn’t the job they had when they were injured. This presents an issue for workers in specialized fields who are unable or uninterested in switching occupations. Securing own-occupation coverage is crucial if you anticipate this presenting issue to your business interests.
It can be expensive for a small business to pay for an employee’s disability insurance fully. In these instances, you can choose to offer these benefits to employees on an optional basis. Through the method, your employees can opt-in to the benefits and pay for most, if not all, of their coverage through structured, scheduled pay deductions. As a result, the price of disability policies will vary based on things such as:
- Income level
- Risk of incurring a disability
- Length of benefits
- Age of the employee
- Length of the elimination period
Let Canal HR Help You Find the Best Disability Coverage For You
There are many factors to consider when choosing disability insurance for your business, but as mentioned, there are plenty of benefits to offering it. You don’t need to waste your time calling providers and pouring over the terms of different policies. Let Canal HR help. We are well equipped with the experience and insight necessary to help you secure the ideal coverage. Call Canal HR today or visit our website to get more information on disability insurance or any other services we can offer your business. At Canal HR, we take the hassle out of human resources.