Benefits of Using a Disability Insurance Broker

Written by: AEIS

a man in a wheelchair is sitting at a desk looking through insurance documents, his company would benefit from a disability insurance broker

What is a Disability Insurance Broker?

As the name implies, a disability insurance broker is a professional who helps obtain the insurance coverage they need to live comfortably in the event they have a disability that keeps them from working. A broker will work with their clients and learn as much about their situation as possible. They will then work directly with insurance companies on behalf of their clients to help put together the policy to meet those needs.

Benefits of Using a Disability Insurance Broker

One of the major benefits of using a disability insurance broker comes by way of the education that they provide. Insurance is a complicated topic on a good day — to say nothing of how difficult things can be when you're wading into something as essential as disability insurance. A broker will help make sure their clients understand the pros and cons of each coverage type, all so that they can make the most informed decisions possible when it comes to their health.

By nature of their professional status, a disability insurance broker will also be able to leverage their career to the benefit of clients everywhere. They're not starting from scratch, so to speak — they come with pre-existing relationships that they can use to get the best possible rate and to secure other types of coverage that a business or individual may be unable to get on their own.

What Are the Types of Disability Insurance?

All told, there are different terms for different types of disability insurance coverage that people should be aware of moving forward. Only by understanding what kind of needs each type is designed to meet (and what they aren't) will you be able to make the best decision possible.

Short-term disability coverage. This is designed to provide coverage for someone after an injury or illness when they are expected to recover in between a few weeks and a few months.

Long-term disability insurance. This is coverage for those periods of time when someone will be out of work for more than several months and it can potentially pay out claims on a disability up until one reaches Social Security Normal Retirement Age (SSNRA).

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.

a man in a wheelchair is sitting at a desk talking on a cell phone with a disability insurance broker

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

a woman is pushing a man in a wheelchair in a park

At AEIS, we understand how convoluted shopping for the right type of insurance can sometimes feel. This is true for individuals who just want to make sure they have the disability coverage they need, as well as for businesses who are trying to put together the most competitive benefits package possible.

That's why we pride ourselves on our ability to make topics like disability insurance as simple as possible. In addition to getting you the coverage you can depend on, we want to free up as much of your valuable time as possible so that you can focus on more important matters — exactly the way it should be.

If you'd like to find out more information about the major benefits that come with using a disability insurance broker, or if you're eager to get started and would like to discuss your needs in more detail, please don't hesitate to contact the team at AEIS today.

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