What Is Group Disability Insurance?

Any time you're unable to work for an extended period due to a health condition, it's called a disability.
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What Is Group Disability Insurance?

Written by Brian Greenberg
CEO / Founder & Licensed Insurance Agent

Last updated: November 24th, 2022

Reviewed by Paige Geisler
Licensed Insurance Agent

Other times, a disability is permanent, and you’re never able to return to work. In either situation, disability insurance can help you financially. There are different types of disability insurance, and you may qualify for more than one type at a time. Today we’ll discuss a common type called group disability insurance. Sometimes, disabilities are temporary, and you can return to work after a few weeks, months, or years.

What is Group Disability Insurance?

Group disability insurance is employer-sponsored coverage typically offered for little or no cost to you. It provides benefit payments to replace some of your income if you’re out of work due to an injury or illness that’s left you temporarily or permanently disabled.

How Does Group Disability Insurance Work?

If your employer offers group disability insurance, you must sign up for it. You may be able to do this during your employee onboarding or the annual benefits enrollment period. Certain qualifying events (like getting married or having a child) also allow you to sign up or change your policy

You’ll have to meet specific qualification criteria if you need to receive disability payments through your insurance policy. In addition, payment eligibility varies from one company or policy to another, so you should read your policy in detail to understand your actual coverage. In some instances, you may not be eligible for benefits even though you cannot complete your current job. For example, most group disability policies won’t cover work-related disabilities. These types of injuries are covered by workers’ compensation insurance that your employer is required to have under state law. The insurer also may not pay if you can perform another job, even if that one pays significantly less than your current job.

A few common reasons people use their group disability insurance coverage include:

  • To undergo mental health treatment (specifically inpatient treatment stays)
  • During the final months of pregnancy and for some time after the birth
  • To recover from a physical injury, such as a broken bone or severe sprain
  • To recover from and receive treatment for a serious illness, like cancer or pneumonia

You might qualify for more than one type of disability income assistance. For example, you may have an individual disability policy or receive workers’ compensation. If you receive any other form of disability payments, your group policy benefits will be reduced.

Who Should Consider Group Disability Insurance?

If your employer offers free or low-cost group disability insurance, you should sign up for it. As long as the policy is affordable, there’s no downside to signing up, and it could help significantly if an accident, injury, or illness occurs in the future.

How Does Group Disability Insurance Differ From Individual Disability Insurance?

There are several differences between group and individual disability insurance. The most significant ones include:

  • Accessibility: Group disability insurance is based on the company you work for, so it doesn’t transfer from one job to another. Individual insurance follows you, so it would continue to provide benefits if you switched jobs. This makes individual insurance policies more accessible than group policies.
  • Cost: Individual disability insurance policies tend to cost more than group options, sometimes significantly so.
  • Coverage: Since individual disability insurance is underwritten for the individual, it can potentially provide more benefits and coverage than group disability insurance.

How Many Employees Can be Enrolled in a Group Disability Insurance Policy?

Generally, a company must have at least 10 employees to qualify for a group disability insurance policy. However, employee maximums vary by insurance provider and policy specifications.

How Much Does Group Disability Insurance Cost?

For the employee, group disability insurance is often free or costs next to nothing. The costs for employers can vary significantly based on numerous factors. Factors that can alter prices include the number of employees, type of group disability policy, business sector, location, and provider. Companies looking for group disability insurance are encouraged to shop around before making purchases.

Where Can You Get Group Disability Insurance?

Employees can qualify through group disability insurance through their employers or other groups like unions. Employers can find insurance options through several companies, including Anthem, Prudential, Principal, and MassMutual.

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