Should I Include Life and Disability Insurance in My Benefits Plan?

When an accident, injury or illness causes an employee to miss long periods of work, the personal financial consequences can be devastating. Employer-sponsored disability insurance provides income replacement so that those employees can pay bills and maintain their basic needs. By offering life and disability insurance, you give your employees peace of mind in the event of an emergency or unplanned illness. Employers may offer short-term disability coverage, long-term disability coverage or both but many stick with the more standard health, dental and/or vision plans. By offering these lines of coverage as a part of your employee benefits plan, you are able to stand out in the marketplace to recruit and retain the most talented employees.

Short-term disability (STD) coverage provides sick and/or disabled employees with a specified percentage of pre-disability income once the eligible employee meets the elimination period requirements. The length of time an employee can use STD coverage varies based on the plan purchased, but is typically not more than three months. Some conditions that trigger short-term disability benefits include:

• Pregnancy
• A disabling injury
• A lengthy illness

Long-term disability coverage (LTD) benefits start when short-term benefits are exhausted. LTD insurance typically protects an employee against a catastrophic illness or injury, but many long-term disability claims result from common medical conditions that cause an increasing level of impairment over time. The Council for Disability Awareness lists the most common LTD claims as:

• Musculoskeletal/connective tissue disorders (back pain, osteoarthritis)
• Cancer
• Injuries/poisoning
• Cardiovascular/circulatory disorders (heart attack, coronary artery disease)
• Mental disorder

LTD insurance is sometimes confused with workers’ compensation insurance. Workers’ compensation may cover both lost income and medical expenses and is only applicable when injuries or illnesses happen on the job. The majority of disabling injuries and illnesses covered under LTD happen outside of work and for those situations; workers’ compensation insurance usually doesn’t apply.

Term life insurance is the most simple of the life insurance policies. As you can probably guess, term life insurance is good for a set amount of time, such as five years, 10 years or 20 years. The policyholder must die while covered under the terms of the policy for his or her named beneficiaries to receive a payout or death benefit. A person’s age, overall health and life expectancy usually determines their term life premium. There are other supplemental life insurance products on the market as well.

When it comes to choosing what you might include in an employee benefits program, keep in mind that perks like life and disability insurance can help protect an employee’s family – even after their death. These programs can also help pay off debts and other expenses and provide an overall feeling of security should a sudden death occur.

At FrankCrum, our benefits specialists will work with you to customize the best employee benefits package for your business within your budget. We handle everything from benefits selection, to enrollment, and daily administration. Call 1-800-393-0815 and select option 8 or email us at benefits@frankcrum.com to learn more.