Typically covers 3-12 months of disability at 40-70% of your normal income. Independently, these can be expensive plans, but in many cases, employers cover this benefit.
However, if your disability extends beyond the coverage period, then you are left uncovered without a long-term disability plan.
Group disability policies are not a bad option, particularly if your employer is paying for it. There are a few potential issues, however.
They are not truly own-occupation, specialty specific policies. Meaning, many of these policies will only pay for a limited period of time if you can’t work in your own specialty (typically 2 years), and then only pay out if you can’t work in ANY occupation.
The policy is typically not portable. Meaning, if you are in between jobs, you lose your coverage until you enroll in new group coverage.
You are not the policy holder. Therefore, if your group for some reason decides to drop coverage, or change coverage, you don’t have any control over this and you could be left uncovered.
Coverage for psychiatric disability is limited. If you’re disabled for psychiatric reasons, many group policies will only cover you for up to 2 years. With up to 23% of physicians reporting depression and up to 54% reporting burn out in 2022, this is an important consideration.
Finally, payouts are taxable. Benefits are typically taxable if your group pays for the insurance coverage.
Individual disability benefits, however, are not taxed.
Some medical associations offer purchasable group disability as well. These are ok options as well. With a few main caveats.
They are not truly own-occupation, specialty specific policies. Particularly as it relates to partial disability. Meaning, if you are partially disabled, it may not pay out the way you might have hoped.
They are not non-cancellable. Meaning, while you have the option to renew every year, the premium charged can go up. In general, as you age, premiums increase.
You are not the policy holder. Therefore, if the association decides to drop coverage, or change coverage, you don’t have any control over this and you could be left uncovered.
Coverage for psychiatric disability is limited. If you’re disabled for psychiatric reasons, many group policies will only cover you for up to 2 years. With up to 23% of physicians reporting depression and up to 54% reporting burn out in 2022, this is an important consideration.
The monthly benefits may be too little. The benefit amount may be too little for some, relative to their standard income. In these instances, it may not be a bad idea to have a combination of policies.
Unlike the above, individual disability policies are longer-term, customizable policies, unique to you.
The coverages, in general, are more comprehensive, and as you are the individual owner of the policy, you are therefore in control of all the details regarding policy and any changes made to it.
Most important, in this regard, is to decide what you need in a policy.
