Isnare Free Articles
Authors Contents [Add OpenSearch]
Distribute your articles to more than 6,000+ sites and 40,000+ email group publisher subscribers for as low as $2 / article...
Index  Article Directory  Finances
Embed this Article  
Robert D. Cavanaugh, CLU

Robert D. Cavanaugh, CLU x 27 articles

Liked the article? Consider buying me a beer!
$

Most Recent Videos Most Recent Videos

Millions of people are insured by group long term disability plans. However, there are drawbacks to this coverage and situations where the policies will not pay. Unfortunately, many group plans do not pay for the type of disability that is most likely to occur. Theoretically, you are covered. But are you?

Let's contrast some of the more important contract provisions in a group LTD plan and an individual policy. You can come to your own conclusion.

Can the Coverage Be Cancelled?

Group LTD plans can be cancelled in two ways. First, the insurance company can cancel the plan if their claim experience is bad. Second, your employer could decide to terminate the plan at any time. If a company can downsize, it certainly can curtail benefits.

When you buy an individual disability insurance policy, the insurance company can never cancel the policy. You alone decide when you want to coverage to stop.

Can Premiums Be Increased?

If the insurer sees an increase in claims, it will raise the premium on a group LTD plan. Individual policy premiums are frozen for the duration.

Portability

What if you change employers? You cannot take your group plan with you. By contrast, your individual disability income plan is completely portable since it is not tied to any company employer.

Today, the average person will change jobs 7 times during their career. There is no assurance that each employer will offer a long term disability plan.

Taxation

Group long term disability benefits are taxable just like income. Individual policy benefits are 100% tax-free.

Offsets

Group LTD benefits are reduced by the amount of benefits received from Social Security, Workers Compensation, state cash sickness program, etc. Individual policies have no offsets.

Own Occupation

Individual policies have the ability to protect the individual in his or her "own occupation." Typical wording for the definition of disability for group LTD, as it pertains to occupation, goes something like this: "For the first two years, the inability to perform each and every duty of your occupation; after two years, the inability to engage in any gainful occupation."

This means you are covered in your occupation for two years. After that, if you can sell pencils on the street, the insurance company will not pay.

Certain occupations can be covered forever by individual policies. For example, if a urologist becomes disabled to the extent he or she cannot practice the specialty of urology, but could teach urology at a medical school, the individual policy would continue to pay the disability benefits. Moreover, the doctor would receive both the individual policy disability benefits and the medical school teaching salary.

Presumptive Disability

Disabilities that are "presumptive" are those where the insurance company will pay the full benefit even if the person is fully employed. Examples are the loss of use of two limbs, loss of sight, hearing or speech. A person who is in a wheel chair because they lost the use of their legs in a car accident is a typical example. This is a benefit provided by individual policies, but not by group LTD plans.

Partial Disability

This is the most important distinction because over 70% of the claims filed at insurance company home offices are for partial disability. The person is not completely unable to work. Their disability may only allow them to work a certain number of hours per day and their salary is adjusted downward accordingly.

An individual plan pays a percentage of the total benefit that represents the percentage of income lost. For example, if a person making $5,000 a month with a $3,000 a month individual policy benefit loses 60% of their income due to a disability, the policy would pay 60% of $3,000 or $1,800. Most group plans do not pay for a partial disability.

Conclusion

You have seen that group long term disability income plans can be cancelled, premiums waived and lack portability. Benefits are taxable and are offset by other plans. They posses no ability to protect an occupation and, most important, most do not pay for the type of claim most likely to occur: partial disability.

Individual disability insurance plans do not have these limitations. They cost more, but when it comes to disability coverage, you get what you pay for. If you get in an accident or develop a sickness that inhibits your ability to put food on the table, your thoughts are not focused on what the premium is for your disability income insurance coverage. You simply want to know when your disability check will arrive in the mail.

Rate this article:
Robert D. Cavanaugh, CLU is a 36-year financial and estate planning veteran and author of the free newsletter, "The Estate Preservation Advisor". For cutting-edge, easy-to-understand financial planning resources and techniques to increase your income, reduce taxes and preserve your estate and to claim the free video, "How to Sell Your Life Insurance Policy for More than the Cash Value", go to http://theestatepreservationadvisor.com/rd/subscribe.htm
Important NoticeDISCLAIMER: All information, content, and data in this article are sole opinions and/or findings of the individual user or organization that registered and submitted this article at Isnare.com without any fee. The article is strictly for educational or entertainment purposes only and should not be used in any way, implemented or applied without consultation from a professional. We at Isnare.com do not, in anyway, contribute or include our own findings, facts and opinions in any articles presented in this site. Publishing this article does not constitute Isnare.com's support or sponsorship for this article. Isnare.com is an article publishing service. Please read our Terms of Service for more information.

Most Recent Articles

Kitchen Decoration Process

An Article by Hasan Sarker in Home Management

6 hours ago

The kitchen is not a simple stack of cabinets, hoods, stoves and electrical appliances, but is combined with the whole kitchen environment to create a pleasant and enjoyable living space. But the face of the kitchen decoration is a lot of people can start, just hydropower transformation of this one problem can be stumped a lot of heroes, so a clear and practical kitchen renovation Raiders is even more important...

How to Find Best Contractor Payroll Management Solution in Australia

An Article by Tristan T in Business Management

8 hours ago

Now-a-day, every organization has its own unique set of head - Basic salary, Allowances, and Reimbursements. In addition to these there are sometimes variable earnings, and deductions in payroll. Additionally, there could be out of payroll payments that need to be paid once in a while. Then there is the concept of benefits which could be in or out of payroll too...

How Audio Books Can Help You in Your Workout

An Article by Jawed Smith in Computers and Technology

1 day ago

There's no doubt about it. Audio books have made life a lot much easier. For those people who want to exercise to remain in excellent shape, audio books can assist us to accomplish this with less tension. Normally people think audio books are very expensive or very monotonous. That's not actually true...

RevenueHits Review Earne – Make $800 Per Month

An Article by Sabrina Akter in Travel

1 day ago

earneRefresh: There's a mid year promo that you should exploit at the present time. In the event that you join BEFORE July fifteenth 2017 and begin acquiring with Revenuehits you will get an additional reward. Here are the terms:• A new Publisher who will – join to RevenueHits, utilize the stage for a time of 1 month and reach no less than 1000 USD in Revenues – will be remunerated with 100 USD Sign-Up Bonus;• A new Publisher who will – join to RevenueHits...

Omega De Ville Prestige Co-Axial Chronometer Automatic Power Reserve 424.20.37.20.02.001 Men’s Watch| a Classic Returns in a Modern Disguise

An Article by Jason Ca in Entertainment

2 days ago

The bottom line:The Omega De Ville Prestige Co-Axial Chronometer Automatic Power Reserve 424. 20. 37. 20. 02. 001 Men’s Watch mixes olden looks to a new design and offers a lot to enjoy. Its noticeable quirkiness is way apart from what you usually find in the mainstream brands and is free from the unnecessary conservatism...

What Are the Benefits of Aluminium Shutters?

An Article by JOSEPH ZAMMIT in Home Management

2 days ago

Aluminium is a strong and durable material that is ideally suited to external applications. It does not warp or become brittle like wood, it does not rust like iron and is perfectly suited to the harsh Australian weather conditions. It therefore follows that aluminium shutters are the best window covering option for your home...

2017 NS0-191 Dumps NCSE NS0-191 Exam Questions NetApp NS0-191 Practice Exam

An Article by Delia Green in Computers and Technology

2 days ago

NS0-191 exam is a new turning point in the IT industry. Killtest is a site that comprehensively understands the Network Appliance NS0-191 exam. Killtest is recognized as the leader of a professional certification exam, it provides the most comprehensive Network Appliance certification standard NS0-191 Dumps NCSE NS0-191 Exam Questions NetApp NS0-191 Practice Exam...

Why Quality Content is Important For Your SEO

An Article by Kate Cage in Internet

2 days ago

Search engine optimization is an important part of your business content marketing strategy. It influences your position in online search results, allows you to generate more traffic, and consequently helps you generate more leads. In other words, SEO helps your business grow. But there is a catch, you need to create quality content in order to implement SEO in the best way possible...

Healthy Employee, Productive Employee

An Article by Arati Shah in Wellness, Fitness and Diet

2 days ago

The growth of an organisation is determined by the productivity of their employees. The productivity is achieved when the employee is focused, healthy and has a positive competitive work environment. A healthy human state leads to low absenteeism and better work quality and output. Employee productivity has a direct tie to company wellbeing and the bottom line...

Lesser Known Facts About Kanwar Yatra

An Article by Devendar Agarwal in Religion

2 days ago

Facts about Kanwar YatraSawan is here. Sawan is synonymous with Lord Shiva and his worshippers, also known as Kanwariyas, they travel to places like Haridwar, Allahabad, Gaumukh, and Gangotri in Uttarakhan and Sultanganj in Bihar to get Gangajal, i. e. the holy water from the river Ganaga, to offer to Lord Shiva...

Modern Home Architecture & Decor Trends of 2017

An Article by Bimal Hegde in Real Estate

2 days ago

If you plan to buy a property in Bangalore, you surely want to keep yourself updated about the latest trends in architecture and home decor. There are plenty of 2/3bhk flats in Bangalore available for sale, but you would want to buy one that is trendy, contemporary and well designed. So, what are the residential architecture and decor trends for the year 2017...

Developing Mobile Apps 70-357 Braindump

An Article by Kruis Barry in Education

2 days ago

You can choose Passcert Developing Mobile Apps 70-357 braindump for your 70-357 Certification Exam. Passcert Developing Mobile Apps 70-357 braindump are prepared by IT Professionals. We are strongly confident that you will pass your 70-357 exam the first time. With our complete Developing Mobile Apps 70-357 braindump, you will minimize your Microsoft cost and be ready to pass your 70-357 exam on Your First Try...

H12-321 HCNP-WLAN-CEWA Exam Practice Test

An Article by Kruis Barry in Education

2 days ago

If you feel that you purchase Passcert H12-321 HCNP-WLAN-CEWA exam practice test, and use it to prepare for the exam is an adventure, then the whole of life is an adventure. Gone the furthest person is who are willing to do it and willing to take risks. Not to mention that Passcert H12-321 HCNP-WLAN-CEWA exam practice test are many candidates proved in practice...

Why Marketing Your Book is Important

An Article by Author John Fleming in Marketing

2 days ago

There are between 600,000 and 1,000,000 books published every year in the US alone. On average, they sell less than 250 copies each. With these given data on book publishing, what will you do to make you and your book stand-out. The answer is marketing. With the fast-paced book competition around the world, you need to engage yourself in the hands of the powerful marketing...

Ski and Snowboard Carriers Perfect Solution For Transporting Your Snow Gear

An Article by Tony Bulic in Travel

3 days ago

With projections and unique shapes, one cannot deny that skis, snow boards and allied snow gear just don’t pack up well. Some are undeniably long, some gear is squat and wide or bulky. Trying to fit them all into the meagre storage space of any car is going to be a challenge – they simply occupy too much space...

MLA Style Citation:
CLU, Cavanaugh, D. Robert "Why An Individual Disability Insurance Policy Is Better Than Group LTD." Why An Individual Disability Insurance Policy Is Better Than Group LTD. 16 Apr. 2008 Isnare.com. 23 Jul. 2017 <https://www.isnare.com/?aid=150441&ca=Finances>.
APA Style Citation:
CLU, Cavanaugh, D. Robert (2008, April 16). Why An Individual Disability Insurance Policy Is Better Than Group LTD. Retrieved July 23, 2017, from https://www.isnare.com/?aid=150441&ca=Finances
Chicago Style Citation:
CLU, Cavanaugh, D. Robert "Why An Individual Disability Insurance Policy Is Better Than Group LTD." Why An Individual Disability Insurance Policy Is Better Than Group LTD Isnare.com. https://www.isnare.com/?aid=150441&ca=Finances
Copy and paste the code below to embed this article:
<a class="embedly-card" href="https://www.isnare.com/?aid=150441&ca=Finances">Why An Individual Disability Insurance Policy Is Better Than Group LTD</a> <script>!function(a){var b="embedly-platform",c="script";if(!a.getElementById(b)){ var d=a.createElement(c);d.id=b,d.src=("https:"===document.location.protocol?"https":"http")+"://cdn.embedly.com/widgets/platform.js"; var e=document.getElementsByTagName(c)[0];e.parentNode.insertBefore(d,e)}}(document);</script>