Voluntary Disability Insurance
(Everything you need to know - and more)
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Jeff Green has held a variety of sales and management roles at life insurance companies, Wall street firms, and distribution organizations over his 40-year career. He was previously Finra 7,24,66 registered and held life insurance licenses in multiple states. He is a graduate of Stony Brook University.
Voluntary disability insurance is not one that you hear about a lot. Usually, people are speaking about the benefits of other disability plans, but not today. Today you are reading about voluntary disability, and by golly, you will understand it when you’re finished.
If you want to take a deeper dive into voluntary disability when you’re done, then reach out to your local independent insurance agent. They have a number of different options and knowledge about the subject.
What Is Voluntary Disability Insurance?
The basics are the best place to start on any subject and it’s the same with voluntary disability insurance. Voluntary disability insurance comes in different forms and is a lot like it sounds — voluntary. Plans are offered by your employer unlike some other disability policies which are paid all by the employee with no contribution from the employer.
Types of voluntary disability insurance plans
Voluntary short-term disability insurance: This plan is for short-term illnesses or disabilities where a portion of your income is supplemented for usually 1-12 months. Anywhere from 40-70% of your income can be supplemented.
Voluntary long-term disability insurance: Like short-term, this plan will cover disability or illness by supplementing 40-70% of your monthly income back in your pocket. The difference is that it will cover a longer period of time. Instead of months, think years and sometimes even decades.
Who Needs Voluntary Disability Insurance and Why?
Voluntary disability insurance is still offered by your employer as a group disability plan. Unfortunately, it will not be paid by your employer but instead by you. That’s okay because the plan is paid after taxes typically, and that means the benefits are tax free to you.
Voluntary short-term disability, who needs it, and why: Everyone who has an income is a really safe bet. Do you happen to have a year's income stashed if you have an illness or disability that keeps you from working? Most people don’t, and even if they do, they don’t want to eat it all up when they could have used a voluntary short-term disability policy.
Voluntary long-term disability, who needs it, and why: Again with everyone. But seriously, if you don’t have an extra year's worth of income lying around, what about a decade or more? Yeah, not likely. Voluntary long-term disability coverage can only help provide income when you really need it and are unable to obtain it yourself.
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When Is the Best Time to Get Voluntary Disability Insurance?
Now. Listen, this isn’t some info commercial creating a false sense of urgency just to get you to buy a cheap product you don’t need. This is the truth, and the truth is you need voluntary group disability insurance before it’s too late.
Since you probably don’t have a crystal ball predicting the exact moment a disability or illness may befall you, then it’s better to be safe than sorry.
Best time to buy voluntary short-term disability insurance: There is no time like the present, and in the voluntary short-term disability game, there’s no time to lose. If you have a short-term disability that keeps you out of work for a few months, you'd better have a plan for how you are going to keep the heat running.
Usually that takes little green slips of paper, and voluntary short-term disability insurance pays out in just that.
Best time to buy voluntary long-term disability insurance: Do you see a theme going on here? I bet you can guess what comes next. Buy voluntary long-term disability insurance as soon as you can. A good independent insurance agent can go over the details, find the plans, and if you are an employer they can help with the employee offerings on any of these policies.
What Is the Best Voluntary Disability Plan?
Best is relative, isn’t it? And in the voluntary disability insurance world, it’s that way too. Since every person is different when it comes to their age, health, and coverage needed, then the question is what is the best plan for you?
An independent insurance agent is there to help employers pick the right plans to offer, and to help employees decipher if the plans offered are enough or if they need to be supplemented with another disability policy.
This applies to both voluntary short-term and voluntary long-term insurance plans, and it's best to consult with your agent.
How Long Does Voluntary Disability Insurance Last?
Voluntary short-term disability insurance: Short-term is going to last only months and usually no more than one year. Not to fear, that is when your voluntary long-term disability policy will kick in.
Voluntary long-term disability insurance: This will last considerably longer than your short-term disability, paying out over years and sometimes decades in supplemental income.
How Much Will Voluntary Disability Insurance Cost?
Cost is a valid question and one that needs to be discussed with your independent insurance agent. The premium differences vary from person to person and policy to policy. Since no two people are the same and every policy is tailored around each policy owner, then speaking with your trusted independent insurance agent is the best route.
Is Group Voluntary Disability Coverage State-Specific?
Some states actually offer employers and employees an option to apply to a state-funded voluntary plan that will pay for voluntary disability insurance premiums. Check with your local independent insurance agent for your state specifics.
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How Can An Independent Insurance Agent Help?
Use our independent agent matching system to find the best insurance plan in your area. You tell us what you’re looking for, and our technology will recommend the best agents for your needs. Any information you give us will only be sent to the agents you pick.
They can help in so many ways, but a few of the big ones are:
- They work with several different insurance companies providing you with multiple options.
- They work for you, not the insurance companies.
- They are local and know a few people that can help in other areas of your life such as CPAs, attorneys, and other brokers.
- They care about your best interests and advise you on which policy is right for your specific situation. No one size fits all here, folks.