Why is it frequently true that group long term disability (LTD) insurance purchased at work is less expensive than individually purchased LTD insurance?
There are a number of reasons why group LTD may be purchased by employees at a lower premium cost than what these same individuals can purchase on their own, away from their place of employment. First, an employer often contributes toward the premium cost of group LTD coverage, thereby reducing the out-of-pocket cost to employees. Secondly, group LTD plans almost always coordinate their benefits (i.e., plan benefits are reduced) with any disability benefits payable under Workers’ Compensation or Social Security. In contrast, individual disability income insurance typically pays benefits in addition to any benefits payable under social insurance programs. Third, individual policies often contain a longer maximum benefit period, a “non-cancelable” feature, a “cost-of-living” benefit rider, and an option to purchase additional insurance–expensive features not always found in group LTD policies. Fourth, marketing and sales, administrative, underwriting and other expenses are usually lower
There are a number of reasons why group LTD may be purchased by employees at a lower premium cost than what these same individuals can purchase on their own, away from their place of employment. First, an employer often contributes toward the premium cost of group LTD coverage, thereby reducing the out-of-pocket cost to employees. Secondly, group LTD plans almost always coordinate their benefits (i.e., plan benefits are reduced) with any disability benefits payable under Workers’ Compensation or Social Security. In contrast, individual disability income insurance typically pays benefits in addition to any benefits payable under social insurance programs. Third, individual policies often contain a longer maximum benefit period, a “noncancelable” feature, a “cost-of-living” benefit rider, and an option to purchase additional insurance–expensive features not always found in group LTD policies. Fourth, marketing and sales, administrative, underwriting and other expenses are usually lower
Related Questions
- Why is it frequently true that group long term disability (LTD) insurance purchased at work is less expensive than individually purchased LTD insurance?
- Why is group long term disability (LTD) coverage( purchased at work) usually less expensive than individually purchased LTD insurance?
- What is group long term disability income insurance?
