Group Disability Insurance: How does it benefit Postal Subs?
The basics of group disability insurance
Group disability insurance is a single disability policy that covers many people (a group). The insured group has a common interest or association, such as an employer, a trade, or a school affiliation. All eligible individuals may be covered by the policy, and the cost of group coverage is often less expensive than the cost of individual coverage. The plan may be contributory (you must sign up for coverage and contribute toward the premium payments) or noncontributory (funded by the employer or association, and you are automatically covered if you meet eligibility requirements).
When you apply for group disability insurance, you are not issued an individual policy, nor are you evaluated for coverage as an individual. Instead, the policy is issued to the organization or company that represents the group (the master policyholder). The individuals within the group that apply for disability insurance are issued certificates of coverage rather than individual policies. These certificates are proof that coverage exists, and they contain information about the amount and type of coverage provided.
Advantages of group disability coverage
Group disability policies often have fewer underwriting restrictions than individual disability policies. That’s because the risk of disability is borne by the group rather than by an individual. A fairly large group will include mostly individuals who are good risks, as well as a few individuals who are poor risks. Even though individuals enrolling in a group disability plan will not have to pass a physical exam, they will have only a limited enrollment period to take advantage of this provision. This helps to prevent individuals with health problems from enrolling after they have discovered that they are sick.
Another big advantage of group disability insurance is that premiums are much lower than premiums for individual disability insurance policies because it’s more cost effective to underwrite insurance for a group than for individuals.
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