Disability benefits are a critical part of any group plan and protect the most valuable assets; your people. It is important to ensure that employees are made aware of their coverage and any ability to top up through the group plan, but this is critically important for key employees and business owners to ensure that the impact to the business or organization is reduced in the event of disability.
In addition to group disability plans there are plans that can enhance current group coverage for key employees and business owners.
Wage Loss Replacement Plan/Salary Continuation Plan
This type of insurance arrangement can be used to provide disability income protection for a group of key employees. Employers have full control over selecting participants and benefit levels by defining classes of employees. Premiums are a tax-deductible business expense.
Ideal candidates: These types of plans are ideal for small-to mid-sized businesses who are looking for a more comprehensive plan than is offered in group plans. These are often set up for management classes that are under-insured based on the group limits or salary levels.
Employer advantages: This type of coverage can attract and retain key employees. Premiums can be paid by the business and are considered a tax-deductible business expense. These policies can be put in place for 2 or more employees.
Employee advantages: Employees receive coverage without having to contribute to the plan, and premiums paid by the employer are not added to the employee’s income as a taxable benefit. Since these are considered individual policies, they are portable in case of termination and the contract has broader definitions than is available to group insurance plans.
Business Overhead Insurance
The impact to a business when an owner becomes disabled is two-fold; there is a need to cover personal income as well as a need to cover business expenses. Not only do business owners have to worry about coverage to meet their lifestyle needs, but also there needs to fund monthly business/office expenses due to a disability.
Over the long term, many business expenses will disappear, but in the short term, there may be monthly business expenses that must be paid such as rent, salaries, benefits, leasing costs, membership fees, accounting, and legal fees.
Business overhead insurance provides protection for professionals and business owners by reimbursing actual covered office expenses incurred during a period of disability.
With organizations of any size, it is important to understand your current disability coverage and consider the impact if a key employee or business owner was sick or hurt and could not longer work.
Please reach out and let us know if you would like more information about these options.