“I have coverage at work”. This is oftentimes a client’s response when individual disability insurance is mentioned or suggested. There is no question that group Long Term Disability (LTD) is a valuable benefit to have, and certainly better than no coverage at all, but it may not completely solve the critical issue of income replacement or be a sufficient safety net.
Unfortunately, people become ill and accidents happen. And when illness or accident does strike, it tends to be unwanted, unexpected and unwelcome. The most unfortunate part being that most people are completely unprepared for the financial setback that a disability can cause, leaving them without the income they need to support themselves and their family.
Here are a few things for your client to consider when weighing additional disability coverage:
- Group coverage typically only covers base salary and not bonuses
- High income earners may be under-insured as most group LTD plans have built in maximums
- Group LTD usually does not include benefits for partial disability
- Most group LTD plans include a two-year regular occupation definition of disability, switching to any occupation thereafter
- Many people change employers and negotiate for increased salary/bonus but overlook whether insurance coverage is provided and the cost to personally replace that coverage (especially at an older age), may not be attainable
- Employers review employee benefits quite regularly and make adjustments to contain costs, so at any time, your client’s LTD plan can change
- LTD coverage isn’t portable, and there’s no guarantee your client’s next job or venture will come with LTD benefits
Definitely more than a few things to consider. However, there are solutions to discuss with your client:
- Executive “Top Up” for an executive client or high-income earner who may be under-insured as a result of group maximums
- For non-executives, review the maximums under their benefit program, and consider a group top up or integration of benefits with group offset
- Consider combining LTD and Critical Illness as complementary products, and share with clients the different claim and payout processes
Need a little help? Use the Income Replacement applet on PPI’s Toolkit Direct to educate your clients on the importance of income replacement coverage, as well as the gaps that exist within group LTD coverage. Those unwanted, unexpected and unwelcome events will strike – will your clients have the coverage they need?
For similar articles, videos and tools on the importance of living benefits, read and share CIDI: Enhancing Your Client’s Benefits Package, Strengthening Your Safety Net with Critical Illness Insurance, Insuring Your Greatest Asset with Disability Insurance and SMART TALK… about living benefits.
And if you have any questions or would like more information on insurance solutions for your clients, contact your local PPI Collaboration Centre.
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Disability Insurance: Is Your Employee Coverage Enough?