Best Group Disability Insurance Companies

Best Group Disability Insurance Companies


Most employers understand that in order to attract and retain quality employees, they need to offer a comprehensive group benefits program. Nowadays, employees are looking for more than just health insurance benefits.

Disability insurance is probably one of the most overlooked types of insurance coverage and yet, it is one of the most important. The ability to earn an income is your most important financial asset.

Many people insure their homes, their cars and their valuables but without the ability to earn an income, those precious assets would not exist. According to the Council For Disability Awareness, 90% of people know they should be prepared for a disability but less than 5% of the workforce has disability insurance protection.

As an employer, you can help protect your employers from a financial disaster by offering a group disability program to your employees.

What Is Group Disability Insurance?

Group disability insurance is insurance coverage that helps employees protect their income should they become sick or injured and unable to work for an extended period of time. This coverage does not insure employees if they are injured at work. Workman’s Compensation covers work related injuries.

A disability contract covers many employees or a group or association. The group has a mutual interest with the company or employer. All eligible employees may be covered under the policy, and the cost of group coverage is often less expensive than the cost of individual coverage.

Who Pays The Cost Of Group Disability Insurance?

The employer can pay the full cost for the employee which is called non-contributory or the employee can pay for the cost of coverage through payroll deductions. Employee paid is called a contributory contract and this type of arrangement will require participation requirements, usually 75%.

There are 2 types of disability insurance an employer can offer to his or her employees: Short Term and Long Term Disability

Short Term Disability – Coverage for Temporary Disabilities

Short-term disability (STD) insurance is coverage for temporary disability due to sickness or injury. It pays a percentage of your salary for a short period of time. Short-term disability reimburses up to 66 2/3% of the insured’s weekly earnings. In addition, the plan could include rehabilitation benefits to help the employee return to work.

  • Pays a percentage of your salary temporarily – usually 26 weeks
  • Reimburses up to 66 2/3% of your weekly earnings
  • May include rehab services to help you get back to work

Long Term Disability – Coverage For Permanent or Total Disabilities

Long Term Disability Insurance (LTD) protects you if you become disabled for a prolonged period of time. Coverage begins when short term disability runs out or after the “Waiting Period” which is normally 180 days. It reimburses up to 60% of your salary to help pay monthly bills and expenses.

  • Starts after waiting period or when short term disability runs out
  • Reimburses up to 60% to 70% of your monthly earnings
  • Helps pays for monthly bills and expenses

Are Group Disability Benefits Taxable?

IRS Code, Section 105 indicates that disability benefits are to be included in the gross income of employees if the employer pays all or part of the premium (Non- Contributory). If the employee pays for the disability premium (Contributory), the benefits received are tax free. See chart below:

How group disability is taxed

 Advantages of Group Disability Insurance

Probably the biggest advantage is that most plans do not require or ask for medical background information making it easier for the employee to qualify for coverage. Disability insurance covers employees when they get sick or injured and can’t come to work because of their illness or injury. The employee receives a percentage of their salary – usually 60% to help them pay their personal expenses and sometimes medical expenses for an extended period of time.

group disability insurance quotesAnother advantage is that the employer does not need to have a salary continuation program in place should the employee become sick or injured. The disability benefits will help provide income so the employee can pay monthly bills or extended medical expenses.

Disadvantages of Group Disability Insurance

No Coverage For Pre-existing Conditions: Group policies will most likely have a number of exclusions. There certain types of disabilities that won’t be covered. Pre-existing conditions such as back problems or cancer will most likely not be covered should the employee get re-injured or fall sick due to a previous health condition.

Any Occupation Not Own Occupation: Most group policies have language that does not cover the employee in their own occupation. These contracts are written so if an employee is disabled and cannot work at his or her job but can do any job, the employee must go back to work or benefits won’t be paid.

Taxation of Benefits: With group disability insurance, your premium payments are most likely tax-deductible so that makes your disability benefits taxable while you are collecting. The 60% monthly income from your policy is reportable on your tax return making it really 40 or 50%.

Most Policies are not Portable: If you leave your employer, your policy stays behind.

Long Term Disability “Must Haves”

Own Occupation Coverage:

This coverage protects the job responsibilities you perform on a daily basis. If you become injured or sick and cannot perform 2 or more of your duties, you are considered disabled. You will qualify for benefits after the waiting period. “Any Occupation” contracts on the other hand, will force an employee to go back to work if they can work at any job. Even if it means flipping burgers or sweeping floors.

Partial or Residual Benefits:

Most people become partially disabled before they become totally disabled. Meaning an employee can work a few days a week due to a sickness or injury but cannot work full time. Some policies will not pay anything unless the employee is totally disabled. Partial or residual benefits pay for the time the employee works – even if it is only one day a week.

Short Elimination or Waiting Periods:

The Elimination Period is the amount of time you must wait before benefits are paid. During this time, no benefits are paid and the employee must pay household expenses and bills from their savings. The best disability contracts have Elimination Periods of 60, 90 or 180 days. Beware of contracts that have 1 or 2 year Elimination Periods.

Earnings Testing

The monthly benefit should be based on total compensation including, salary, bonuses, commissions and so on. Some contracts base the monthly benefit on salary only reducing the amount of income that will be paid by the insurance carrier.

Benefits Duration to Age 65

If the employee becomes totally or permanently disabled, the payment period should last to the normal retirement age of 65. Watch out for contracts that only pay benefits for 2, 5 or 10 years.

Best Group Disability Insurance Companies

There are many insurance companies in the employee benefits arena that offer group disability insurance. But just because you have your group health plan or dental plan with a certain carrier, does not mean you should let them provide your group disability contract. Disability insurance contracts differ from company to company. By no means will a group policy compare with an individual policy but you want to make sure your employees have the best coverage available.

Here’s how we rate the best group disability insurance providers:

Quality of Contract: Most group disability carriers offer similar contracts with the same definition of disability and benefit options. However, the companies on our list make a habit of providing superior contracts that stand above the rest.

Financial Ratings: The financial strength of an insurance company is very important when considering any type of insurance program for your company. You want to be sure the insurance carrier will be able to pay claims and has stability to be in business for the long term.

The rating agencies we follow are:

A.M. Best: Provides objective opinion regarding an insurer’s, issuer’s, or financial obligation’s relative creditworthiness. Their top rating is A++ – Superior
Standard and Poors (S&P): Measures the credit quality of an insurer and the ability to meet their financial obligations. Top rating is AAA – Extremely Strong
Moodys: Provides opinion of future creditworthiness of an insurers ability to pay claims in relation to the investments and current book of business. Top rating is Aaa – Highest
Fitch: This agency provides an opinion on the relative ability of a company to meet their financial commitments, such as interest, repayment of principal, and insurance claims. Fitch’s’ highest rating is AAA – Exceptionally Strong

Competitive Pricing:

While financial stability is essential, competitive pricing is just as important. You don’t want to pay more to one company when another company is offering the same coverage at a lower price.

The 5 Best Group Disability Insurance Providers

Reliance Standard Group DisabilittyReliance Standard is a leading insurance company specializing employee benefits including short and long term disability income. Reliance Standard markets their contracts through independent brokers and agents to employers of all sizes. Their rates are very competitive and continuously make our list of top providers.

Reliance Standard Financial Ratings:

AM Best Rating: A+ (Superior)
Standard & Poor’s Rating: A (Excellent)

Reliance Group Disability Plan Features:

  • No earnings test
  • Extended disability benefit
  • Partial and Residual Disability Benefits
  • Maximum monthly benefits up to $24,000 – Best in Class!
  • Benefit percentage from 40% up to 66 ⅔%
  • Elimination (Waiting) periods from 30 days up to 5 years
  • “Own Occupation” definition of disability from 12-60 months, or long term
  • Partial and residual benefit available
  • Rate guarantees up to 3 years

Cigna Health Insurance Company

Cigna is the number 1 provider of group disability benefits with almost 1 $Billion in annual premium. The company offers employer paid and employee paid group long term and short term disability insurance with very competitive rates.

Financial Ratings

Standard & Poor’s – AA-
Fitch – A+
A.M. Best – A
Moody’s – A1

Cigna Group Disability Plan Features:

  • All classes of employees working more than 30 hours per week
  • Regular Occupation
  • Partial and Residual Disability Benefits
  • 6 Month Waiting Period
  • 60% of monthly Salary
  • $4,000 per Month Maximum Benefit
  • 24 Months Deemed Totally Disabled

Hartford group term insurance

The Hartford Life Insurance Company is part of The Hartford Financial family. The company was founded in 1810 and is one of the world’s largest providers of group benefits.
They offer a full line of flexible benefits including short term and long term disability. Hartford is one of the one of our lowest priced competitors.

Financial Ratings:

A.M Best – A-
Moody’s – Baa2
S&P – BBB+

Hartford Group Disability Features:

  • Up to 67% Monthly Salary
  • Modified Own Occupation
  • Partial and Residual Disability Benefits
  • Waiver of premium
  • 100% return-to-work incentive
  • Workplace modification and family care credit
  • Competitive Pricing
  • 2 Year Rate Guarantee

MetLife Group Disability InsuranceMetLife is the largest group benefits provider in the world. They are one of the most recognized names in the benefits market. The company specializes in the large group marketplace for companies with more than 100 employees but still offers policies to smaller groups with as few as 10 employees. Their policy pricing is competitive but it is not the lowest.

Financial Ratings:

A.M Best rating – A+
Moody’s rating – Aa3
Fitch rating – AA-
S&P rating – AA-

Met Group Disability Features:

  • Regular and Own Occupation Coverage
  • Partial and Residual Disability Benefits
  • 90 to 180 Day Waiting Period
  • Maximum benefit periods are two years, five years, and to age 65
  • 24 Months Totally Disabled
  • 60% of Gross Monthly Salary
  • $5,000 Maximum Monthly Benefit
  • Return to Work Incentive

The Standard Group disability insuranceThe Standard was founded in 1906 and is probably not as well-known as the other big name group benefit providers. However, the company is ranked # 9 of all group disability insurance providers. The Standard makes our Best Group Disability Company list due to its competitive pricing, customer service and quality of contract.

Financial Ratings

A.M. Best – A (Excellent)
S&P Rating – A2 (Strong)
Moody’s – A2 (Good)

The Standard Group Disability Features:

  • Any Occupation and Own Occupation Coverage
  • Own Occupation Coverage to Age 65 – Best in Class!
  • 30 to 180 Day Waiting Period
  • Maximum benefit periods to age 65
  • Partial and Residual Disability Benefits
  • 24 Months Totally Disabled
  • 30 to 70% of Gross Monthly Salary
  • Rehabilitation Benefits
  • Return to Work Incentive

Group Disability Insurance For Your Business

If your small business is looking for group disability quotes, we can help. We work with these top 5 companies and many more. The advantage of working with many insurance carriers is that we can obtain numerous quotes and we are not beholden to any company. Our advice is unbiased and we work for you – our client!

We can help you compare pricing, benefits and features side by side so you can make an educated decision about which carrier would be the best fit for your business as well as your employees. Just call our office at: 800-514-3513

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