Getting Coverage

If you don’t have disability insurance, or just need more coverage than your employer’s basic plan offers, there are three main ways to obtain coverage.

Through your employer

Your employer, particularly if you work for a large company, may provide short and/or long-term group disability coverage at no cost to you. One of the best features of employer-provided coverage is that there is no underwriting, meaning you automatically qualify for coverage. However, if you start a new job and have a pre-existing medical condition, there may be short-term limits on your coverage, typically a waiting period of 12 months.

Another benefit of employer-provided coverage is that you often have the option to increase your coverage from, say, half to two-thirds of your base salary. To qualify for additional coverage, you may have to answer a few basic questions about your health. Keep in mind that if you have group coverage and you leave your job, you usually are not able to take the coverage with you.

If your employer does not provide group disability insurance coverage, it may make a disability benefit available to you on a voluntary, employee-paid basis. While you pay the full cost of the benefits under a voluntary arrangement, there are several advantages to buying disability insurance this way. Voluntary plans help workers get coverage more easily than if they were to purchase an individual policy outside of the workplace. Premiums are typically paid through an automatic payroll deduction and can be as much as 10% or 20% less because of efficiencies in enrollment and billing procedures. Additionally, you may be eligible for more coverage under a voluntary plan than is offered by a traditional group plan.

Through a professional organization

Many professional associations offer their members the opportunity to purchase disability insurance through a group plan. Typically, little underwriting is involved and premiums are based primarily on your age and income. This type of coverage is generally cheaper than an individual policy you would purchase on your own through a local insurance professional.

If your need for coverage is great and your budget is limited, this is definitely an option you’ll want to explore. However, there are several drawbacks. If you change professions, the coverage may not follow you. And there’s always the chance your professional organization could decide to drop its disability coverage. That can’t happen with most types of privately purchased disability insurance, which are guaranteed renewable as long as you pay your premiums.

Buy it on your own

Another good option is an individual disability insurance policy you purchase on your own through a qualified insurance professional. You never need to worry about losing coverage if you change jobs. An individual policy also gives you the opportunity to consider policies from a multitude of carriers. If you buy through work, you’re usually limited to buying or increasing coverage from the one carrier with which your employer is contracted. One downside to individual coverage is that it can get pricey, depending on the policy’s features and benefits.

Your budget, the benefits you desire and your health status help determine whether you obtain coverage on your own, or through your employer or a professional association. Whichever path you choose, you’ll have peace of mind knowing that you’ll be able to make ends meet if you become unable to work owing to injury or illness.

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