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Group disability insurance plans cover the employee incomes weekly or monthly in the event of an employee becoming disabled definitely and indefinitely.

Two types of group disability insurance plans:

Short Term Disability Insurance plans

Short term disability insurance plans pay disability benefits for relatively short periods ranging form 13 weeks to two years. The majority of short-term plans sold today pay benefits for a maximum of 26 weeks.

In addition to the maximum, most plans have a short elimination period of one to seven days for sickness. This period reduces nuisance claims, holds down costs, and discourages malingering and excessive absenteeism.

Most short term plans cover only nonoccupational disability (an accident must occur off the job). You are considered completely disabled if you are unabled to perform each and every duty of your regular occupation. Partial disability is rarily covered under a short-term plan.

The amount of disability benefits relates to the worker’s normal earnings and is typically equal to some percentage of weekly earnings such as 50 to 70%.

Long Term Disability Insurance plans

Many employers have long term disability insurance plans which range for longer periods such as two years to age 65. For the first two years, an employee is considered disabled if he or she is unable to perform all of the material duties of your his or her occupation. After two years, an employee can still be considered disabled if he or she in unable to work any occupation for which you are reasonably fitted by education, training, and experience.

Long term disability insurance plans cover occupational and nonoccupational disability unlike short term plans. Benefits are usually paid monthly and maximum payouts are substantially higher than short term plans. Benefits are also adjusted for cost of living for those disabled more than one year. However, these adjustments are limited to a specified maximum percentage increase in the benefits.

If a disabled worker dies, the plan may pay monthly survivor income benefits to an eligible surviving spouse or child for a limited period of time following the death of the disabled worker.


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