Most likely your employees are insured for disability with a Group Long-Term Disability (LTD) plan. Most likely your employees don’t even think about looking after their personal LTD because they are “taken care of” at work.
LTD plans are very common in Canada. Various surveys have estimated that over 8 million Canadians are insured for disability this way.
Group LTD tends to be one of the least-expensive ways of providing disability coverage. However, with insurance, “least-expensive” also means “least-comprehensive”.
One major drawback to Group LTD is that there are “issue limits” that result in most people, in the event of disability, not receiving anything close to their full pre-disability pay.
Another drawback is that employees who leave the firm lose their disability insurance – you can’t take a group plan with you.
A drawback for an employer is that premiums on Group LTD tend to increase over time.
Another drawback is that Group LTD generally “discriminates” against the high-earning people in a firm – the people who are really making money for the employer. That is because most Group LTD plans have a “cap” on the dollar amount paid. The “cap” isn’t a factor for lower-earning employees but punishes higher-earning employees.
A solution is “Super-Charged Long-Term Disability Insurance”.
Super-Charged LTD is an alternative to Group LTD. With a Super-Charged LTD plan, individual disability insurance contracts are issued on each employee in combination with Group LTD.
The individual disability insurance features much better policy wording and definitions, is fully portable, and the premium rates are guaranteed never to increase.
As well, the combination of Group LTD and individual disability insurance, in most cases (in particular for the higher earners) results in more coverage for everybody. That means a disability will be less financially painful than if the insurance was just Group LTD.
This is one area where a small increase in premium, and a plan made possible through the cooperation of an employer, can make a big difference in the financial security of an employee.