Disability Insurance is a policy that pays benefits in the event that the policyholder becomes incapable of working. They are designed to replace your income and depending on the contract you choose it can pay up to age 65 and beyond. One of the most important features of the policy is the definition of disability. Own occupation is the most advantageous to the individual. This means the policy will pay a benefit if the individual cannot perform the duties of their own specific occupation. This definition is usually found in individually owned polices as well as the first two years of a group policy. Any occupation” definition, such as social security disability benefits or after year two in some group policies, means the policy will pay a benefit if the individual cannot work at any occupation.

Many clients have a group benefit provided by their employer but this benefit rarely covers 100% of their income. Usually this benefit is 60% of salary up to a maximum monthly benefit and because the employer pays for this coverage the monthly benefit paid to the insured if disabled is taxable therefore decreasing the percentage of salary provided even further. This creates a significant gap in coverage therefore we recommend supplementing group benefits with an individually owned policy whenever possible. An individual policy benefit is not taxable because the individual pays the premium and when coordinated with the group benefit provides maximum income protection. Individually owned polices are also portable so if you change employers the coverage is still in place unlike a group policy.