Benefits of Using a Disability Insurance Broker

Written by: Ron Bland, GBDS

• Individual disability insurance. This is the type of coverage that a single person can buy outside of their employer. It can be more difficult to qualify for as these policies generally require proof of good health before a policy can be issued.



• Group disability insurance. This is the type of policy that is offered by employers that is designed to cover their employees. In this situation, the benefits being received may be taxable — it depends on how the plan is set up. It is generally easier to obtain group disability insurance compared to individual insurance as there are fewer instances where proof of good health is required in order to enroll.
  

• Employer-sponsored disability insurance. This is a type of disability coverage that is typically paid either mostly or entirely by the employer.

• Voluntary Group Disability. Another type of group disability policy is where the employee pays most or all of the premium themselves. 

• Social Security Disability Insurance, otherwise known as SSDI for short, is a tax-funded federal insurance plan managed by the Social Security Administration and is available to those who have the required minimum number of Social Security credits. It generally has the most stringent requirements to qualify for and takes by far the longest to get a claim processed and approved. 

• Statutory Disability Insurance. A few states (CA, HI, NJ, NY, and RI as of 2023) also have tax-funded disability insurance administered at the state level. These tend to be limited in their maximum duration. E.g. CA SDI will pay out claims on a qualified disability for up to 52 weeks. 

• Business overhead expense disability insurance. This provides financial compensation to a business in the event that the owner should fall ill or get injured for an extended period of time.

• High-limit/Executive disability insurance. Unlike some of the other types of coverage, this is designed for individuals with high income levels. It is intended to cover a “substantial” portion of their regular income should they get injured or fall ill.

Again, there is no “one size fits all” approach when it comes to selecting the right disability insurance coverage. A policy type that works well for one employer may be woefully inadequate for the next. This is part of the reason it's always recommended to work with a disability insurance broker — they can distill this process down to its bare essentials, making sure employers have the coverage their employees need in the most efficient way possible.

Who Pays the Disability Insurance Broker?

Generally, brokers work on a commission basis, which means that they're paid by the insurance providers they work with when they sell a policy to a client. The broker would receive a specific percentage of the premium as a payment from the carrier in exchange for assisting the client's employer with the administration of the plan. Unless otherwise stated by the broker, there don’t tend to be any additional fees for their services

AEIS Makes Disability Insurance Simple