Your business's benefits package is an important asset to have for potential employees. Many job applicants will base their job decision on the benefits the business offers. Providing short term disability insurance will greatly strengthen your business's employee package. Not only does it provide your employees with a needed cover, but it shows that you value your employees and their health. When adding short term disability insurance to your employee benefits package, there are several different types to consider.
Short term disability insurance presents several features including benefit period, elimination period and benefit amount to its customers. Also, you can choose individual policies, group policies, and group voluntary insurance policies. All types fit several requirements of employees, employers and individuals. This article will shed light on different aspects of three different policies: group, voluntary, and individual.
Short Term Group Disability Insurance
Many companies cover this insurance on behalf of employees. This is a provocative way for employers to attract and retain a quality workforce and it’s frequently offered as part of the benefits package.
The main advantage to this type of insurance is that all employees participate, which in turn means lower premiums as well as guaranteed acceptance. Guaranteed acceptance means that anyone with a pre-existing condition can still get coverage. All employees participate and thus adverse selection is ruled out thereby creating lower premiums. The scenario of adverse selection ensues when buyers have more information about the quality of a product than sellers do (or vice versa). This then dictates that insurance companies attempt to reduce their exposure to large claims by either limiting coverage or raising premiums.
The main disadvantage to group coverage is that the employer has the choice of presenting the benefit of the coverage or not. Should they opt out, it will mean that many employees will have no capacity for replacing income. Another disadvantage is the lack of continuity. If an employee leaves, often their disability policy will be taken away because group short term disability is not transferable.
Short Term Voluntary Disability Insurance
Voluntary short term disability insurance can be good for employers and individuals alike in that it offers reasonable coverage with lower costs and better benefits. It combines certain beneficial elements from group coverage and individual policies which creates a more favorable package to suit both the employee and the employer.
With voluntary coverage, costs as well as claim rates are lowered because of the pooling of risk because the cost of premiums are met via employee payroll deduction. What’s more, the payroll deduction means that the cost of the policy is effectively lowered because it can be paid for by utilizing pre-tax deductions.
This type of coverage is paid for by employees and there is no direct cost to employer. In turn, employers may choose to expand the benefits to their employees. Because it is a group policy, various insurers provide a guaranteed issue, although that normally depends on the level of employee participation. What this means is that employees with either past or existing medical issues can still opt to gain coverage. Furthermore, should an employee choose to leave, the policy is portable and therefore coverage can continue.
Short Term Individual Disability Insurance
The individual insurance market may appeal to you as an employee if you are either parting from your current employment or do not possess group coverage. The benefit here is that you as the holder are in control. You get to choose the structure of the policy so that it fits your needs as well as those of the insurance carrier, and the agent you work with. Further, your coverage will continue no matter where you are employed.
However, there are some drawbacks. Individual policies generally have more restrictive benefits and coverage. For example, mothers-to-be, may not get coverage or may be put on an exceptionally lengthy waiting period is. Also, individual policies often are more expensive than group policies. And lastly, qualification for this type of coverage can be very arduous for those with anything other than an impeccable medical history.
If you need help deciding which San Francisco Business Insurance option would be best for your employee benefits package, give Sweet & Baker Insurance Brokers a call at 877-485-5778 and let us help you. We look forward to helping you secure your business and employees.