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Your Guide to Supplemental Insurance  header image

Your Guide to Supplemental Insurance

Did you know that one in four of today’s 20-year-olds will have some sort of disability that prevents them from working — either short term or long term — before they retire? Of that, 90% of disabilities are due to illness, not accidents.

If your employer offers group disability coverage, that’s great news. Group plans can be really convenient — someone at your company is doing the research for you, and the company may pick up the cost of the coverage. All you have to do is enroll! But that plan may not be enough to adequately cover you. Before you decide to rely only on this group plan, you may want to give individual supplemental insurance a look. 

What Is Supplemental Disability Insurance?

Supplemental disability insurance covers lost income with benefits paid directly to you when you cannot work because of an injury or illness. This coverage essentially insures your paycheck so you can continue to pay living expenses. It’s meant to supplement employer-offered group disability policies. Unlike other forms of insurance, disability benefits are designed to protect your livelihood — your paycheck — when you are unable to work.

If you decide individual disability insurance is right for you, you’ll need to go through an underwriting process. You’ll be asked about your health, pre-existing conditions and whether or not you have a group plan in place. The amount of individual disability insurance you can purchase will depend on the terms of your group plan. If you have a pre-existing condition or other health concerns, it may be more difficult to get the level of coverage you may need. 

Three Reasons to Consider Supplemental Insurance

1. Group Disability Plans May Fall Short

Most group disability plans will cover 60% (or less) of your earnings if you are unable to work. When your employer pays the premium, you will be taxed when you use the benefit. After taxes are taken out, you could receive closer to 40% of your salary with a group disability plan. Can you live on less than half of your current earnings? If the answer is no, you may want to consider supplemental insurance to close the gap.

2. Group Plans Aren’t Portable

If you rely on your company’s group life or disability plan, you’ll likely lose your coverage if you leave your employer. If so, you will be starting at square one with a new policy, and you may need to wait before benefits are available to use. A supplemental plan, however, is your policy no matter where you work.

3. Group Plans May View Your Disability Differently

How your group policy defines “disability” may affect your eligible benefits — and the policy may have specific rules around “chosen professions.”

For example, if you are a dentist who relies on your hands for work and you develop Parkinson’s disease, you would have a difficult time working as a dentist. Your group disability plan would likely provide benefits for a pre-determined time period, but reduce benefits after you have had an opportunity to find a job that allows you to work through your disability. A supplemental insurance plan would help by closing the gap in pay from your chosen profession to a replacement job. 

When Is the Best Time to Buy Supplemental Insurance?

You will get the most favorable rates (and lock in your ability to buy supplemental disability insurance) when you are young and healthy. Buying a supplemental policy is usually much more affordable than a single, standalone policy. If your employer offers a group disability plan, that is a great start! Group policies definitely have their advantages, but may not offer the total package.

Fill the Gaps

Worried you may have some coverage gaps? Talk to your Farm Bureau agent, who will do a SuperCheck® and help ensure you have the right level of coverage for you and your family. 

How can I help you?