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Supplemental Disability Insurance - Bridging the Gaps In Employer Coverage

Article Submitted by: James John

Thursday, 06 August 2009

Protecting Your Income

A supplemental disability insurance policy can reduce your risk of severe income loss in several ways:

Policies can be written to extend your income coverage to 100% very affordably.
Because you pay the premium, all benefits received via the supplemental policy are tax-free.
Gaps in coverage identified by your insurance agent can be specifically closed in the supplemental policy.
While group coverage ends when you leave your employer, supplemental coverage remains with you regardless of for whom you work.

Many medium and large companies offer a group policy to employees for just a few dollars every pay period that is automatically deducted from your paycheck.
The problem is that group policies are typically riddled with limitations and coverage exceptions. For instance:

The average group policy pays up to 60% of your regular income. However, because premiums are primarily paid by your employer, most, if not all benefits received are fully taxable as income! This means your 60% income coverage just dropped to around 42% from a take-home dollars standpoint.
Group disability policies generally cap benefits at between $5,000 and $6,000 per month, regardless of your salary.If your income exceeds these limits, you could find your household cash flow severely constrained even though your policy is paying its maximum benefit.
Read the fine print! Group policies can include exclusions or limited coverage for specific situations such as mental or nervous-related conditions. Coverage for alcohol or drug-related disabilities can be limited to as short as 6 months or excluded altogether.

False Sense of Security

The biggest problem with group policies is the false sense of security they give.
"People think because they deduct a few bucks from their paycheck each time that they're covered if they can't work.", explains Rene Apack, President of Insure Your Future, the nation's leading independent disability insurance brokerage. "It's only after the first disability income check that the hard reality sets in, and by then, supplemental coverage is no longer an option."
While life insurance is generally straightforward (benefits paid upon death), group disability policies get very specific regarding under what conditions and for how long benefits will be paid.
It's only after the insured gets sick or hurt and can't work that he/she find assumptions made about their coverage are wrong and his/her take-home benefits are actually much less than they used to make.

Don't Let a Great Start Be a Miserable Finish

Group disability coverage at work has its place. It is usually very inexpensive and, quite honestly, people don't think much about it. It's a cheap add-on when signing up for life insurance during annual open enrollment. But could your household thrive if your income was cut by 42%? Even if it could, why not almost double your take home during disability for $30-$40 per month?

Article Source: http://www.ArticleBlast.com

About The Author:

John Mossa is a professional writer with rich experience of working in Insurance industry. The author is writing several articles on supplemental disability insurance and Long term disability insurance since couple of years.

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