Employer-sponsored disability insurance is called group disability insurance. Since many individuals are buying into it, group disability policies are often less expensive than those purchased individually.
However, group disability insurance often offers less coverage, and more restrictions on how to access that coverage than private long-term disability insurance policies. Group disability insurance can supplement and even enhance private coverage, so if an employer offers it, coverage should be considered even if a private plan is already in place.
Group disability plans tend to have benefit periods to age 65, and typically provide the totally disabled employee with up to 60 percent of pre-disability income to a specified maximum, such as $10,000 a month. Coverage is available for both short and long term disabilities and often without medical evidence of insurability required. Group disability insurance helps attract and retain quality employees and the premiums are tax deductible to the business.
If an employer offers group benefits, chances are group disability insurance benefits will be included. If the employer is paying the premiums, the benefits are taxable. If coverage is terminated with the employer, the disability policy may end at that time and not be portable.