Disability Insurance: Group or Individual

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Disability Insurance: Group or Individual

Are you confident that your group disability insurance will pay out if you are injured and unable to work? Most companies offer some form of group disability insurance plan to provide some value or benefit to its employees. These plans can provide a level of protection, generally 60% of salary, should you become unable to work due to sickness or injury.

Downside of Group benefits

Do you know the full details of your group plan? There are drawbacks to group plans, and in many circumstances the policy will not pay.  This is where an individual disability insurance plan can provide the needed coverage to ensure you have an income to pay your bills and families needs.

Disability definition

It is important to understand the term “disabled” when looking at your group plan. Many times you must be 100% disabled and unable to perform the duties of your specific occupation for a group plan to payout. Personal insurance will have a payout on a percentage of a disability.

Partial disability

This is one of the key differences between a group plan and personal plan. Many people are only partially disabled, meaning they can work but only for a shortened period of time or can only perform some aspects of their occupation.

An individual plan can pay out a percentage of the maximum payout when partially disabled. As an example, if your monthly maximum payout is $5,000 and you are 60% disabled. Individual plans will pay out $3,000 a month, or 60% of the max amount. Most group plans will not pay out on a partial disability.


Group plans generally change the disability term after 2 or 5 years of coverage, which can result in payments stopping. If after the timeframe you can’t work your regular occupation but can work any occupation even at a lower salary your payments will stop.   Individual plans can still pay out a benefit even if you are working in another occupation.

In addition, group plans can be cancelled by your employer at any time, the cost could increase over the years, and if you leave the position your coverage ends. Individual plans do not have these limitations. Yes, it will cost more but you get what you pay for when it comes to disability insurance. If you are disabled due to sickness or injury, that inhibits your ability to keep the roof over your head or food on the table, your thoughts will not be on the higher premium payment. It will be on ensuring you get that cheque each month.

Talk to your financial advisor. Get in touch.

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