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You may have purchased a disability insurance policy hoping that you would never need to use that policy. Do you know the differences between a group disability policy and an individual disability policy? You owe it to yourself and your family to know the difference before you become disabled so your family can purchase more insurance or different insurance.
What You Need To Know About Group Disability Insurance
Unfortunately, group disability benefits are typically inferior to an individual disability policy because they provide less in the way of benefits, are limited in coverage and will have offsets for other income such as Social Security Disability.
There are also other important differences which include,
1. Group policies are renewed by your employer on an annual basis. As a result, the terms can change and even the disability carriers can change. That can be problematic if you have a pre-existing condition.
2. Group policies are typically not portable. That means you can’t take them with you throughout your life, or as you change jobs. Some policies will allow you to convert to individual policies upon termination of employment but the conversion privilege is expensive.
3. Group policies are typically governed by the Employee Retirement Income Security Act of 1974 (ERISA). The ERISA claims process requires that you submit all of your proof during any claims denial, you exhaust your administrative remedies before you can file a lawsuit and limit your right to a jury trial. Worse yet, group disability policies have what is called a discretionary clause in the policy which limits the ability of a Federal Judge to overturn a claims denial.
What About An Individual Disability Policy?
In a private individual disability policy, the terms of your policy can’t change and the policy can’t be canceled unless you fail to pay the premiums on time. Better yet, many individual disability policies provide for an increase in your benefits. For example, you can begin coverage at $6,000 per month and have the opportunity to increase the amount of the payment for $500 per year for 5 years. That just doesn’t happen in a group disability policy.
Some other differences between a group disability policy and an individual disability policy include:
1. Individual disability policies go with you through life and your career, so long as you pay your premium.
2. Individual disability policies are governed by state law. That means that you are able to file a lawsuit in state court and are able to claim bad faith, damages, punitive damages and even attorneys fees. You’ll have the right to present any new evidence that has been developed.
3. Individual disability policy holders have a right to a jury trial.
Of course, individual disability policies can be cost prohibitive. That’s why for many, the only way to have disability coverage is through a group disability policy. However, don’t believe the hype from the HR department of your employer about how great the group policy is. It can’t be great given the small amount of premium you pay. You pay for what you get!
What Should I Do To Learn More About The Differences Between Group and Individual Disability Policies?
Contact Cavey Law today at 727-477-3263 for your complimentary copy of the go-to Guide “Robbed of your Peace of Mind”. Attorney Nancy Cavey represents disability policy holders throughout the United States and offers a free 30 minutes consultation to review your disability policy.
