Life/AD&D and Disability Insurance

Group Life/AD&D

The U.S. Bureau of Labor Statistics reports that three-quarters of full-time civilian workers are offered life/AD&D insurance by their employers. The overwhelming majority of them take advantage of the benefit.

Group Life and Accidental Death and Dismemberment (AD&D) insurance are two types of coverage often provided by employers as part of a comprehensive employee benefits package. Group Life/AD&D policies can be either completely employer paid or voluntary or both!

The life insurance component provides a death benefit to the designated beneficiaries of the insured employee in the event of the employee’s death. Life insurance policies are important for protecting a family in case the primary earner were to pass away while leaving financial burdens such as debts that need to be paid. Employees often forgo investing in individual life insurance plans, especially at a younger age. A group life policy is an easy way to provide employees with affordable and convenient life insurance with similar characteristics to individual life insurance plans.

The AD&D insurance component provides additional coverage in the event of accidental death or dismemberment, such as the loss of a limb, sight, hearing, or speech. The benefit amount for dismemberment is usually a percentage of the full benefit amount.

Overall, group life and AD&D insurance provide important financial protection for employees and their families, offering peace of mind and security in the event of unexpected death or serious injury.

Disability Insurance Protects Employee Income

Statistically, someone who is 25 years old today is much more more likely to become disabled for at least 90 days by the time they reach age 65 than they are to die by age 65. Yet, they are more likely to purchase life insurance than they are disability income insurance.

Employer’s can provide both short-term and long-term disability as a benefit for their employees. Disability income insurance is available to continue a portion of earnings while an insured is disabled.

Group disability insurance is an affordable and reliable way to provide employees with the financial security and assurance they need if they were to ever be unable to work. Group disability insurance plans can be paid for completely by the employer or by the employee. If paid for by the employee, group disability policies are advantageous when compared to individual disability policies in that they are generally more affordable and more convenient for employees while still providing adequate coverage.

Group Short-Term Disability (STD):

  • Description: Provides a percentage of an employee’s salary (typically 50-70%) for a short period, usually between 3 to 6 months, during which the employee is unable to work due to illness or injury.
  • Importance: Helps employees manage their financial obligations while recovering from a temporary disability, ensuring they can focus on their health without the added stress of lost income.

Group Long-Term Disability (LTD):

  • Description: Provides a percentage of an employee’s salary (typically 50-70%) for an extended period, usually after the short-term disability benefits expire. Coverage can last for several years or until the employee reaches retirement age, depending on the policy.
  • Importance: Offers financial security to employees who are unable to work for an extended period due to a serious illness or injury, helping them maintain their standard of living and cover ongoing expenses.

Advantages of Group Short-Term and Long-Term Disability Insurance:

  1. Income Protection: Both types of insurance provide a portion of the employee’s income, helping them meet their financial needs during periods of disability.
  2. Employee Retention: Offering disability insurance can make a company more attractive to current and potential employees, aiding in recruitment and retention.
  3. Peace of Mind: Employees have peace of mind knowing they have financial protection in case of a disabling illness or injury.
  4. Reduced Financial Stress: By providing a source of income during disability, employees can focus on their recovery without worrying about their finances.
  5. Cost-Effective: Group disability insurance is generally more affordable than individual policies, making it accessible to more employees.
  6. Convenience: Premiums are often deducted directly from the employee’s paycheck, making it easy to maintain coverage.

Overall, group short-term and long-term disability insurance are important components of a comprehensive employee benefits package, providing crucial financial support and peace of mind to employees during challenging times.