If you are working on establishing your employee benefits package, then you might wonder whether disability insurance is an appropriate investment. You might think that your workers’ compensation insurance is adequate for times when an employee sustains an injury or disability, and that this additional coverage is not the best investment. NOT SO FAST.
On one hand, workers’ compensation insurance is a critical commercial insurance asset that will protect employees who get hurt on the job. However, disability insurance is even more expansive, and can assist an employee no matter where they might sustain an injury that leads to a disability.
Let’s take a closer look at these two similar, but separate, employee benefits.
Workers’ Compensation vs. Disability Insurance
Workers’ compensation insurance is coverage purchased and paid for by the business. It allows an employee who gets injured or sick as a result of their work to file for income assistance. Most businesses in most states are required to carry this coverage.
The requirement for workers’ compensation insurance exists because when someone gets hurt on the job, the business is still responsible for the injury regardless of how it occurred. Because an employee might face high medical bills, long recovery times, and lost income because an occupational injury forced them off the job, workers’ compensation ensures that they receive financial support under the circumstances. It also frees the employer from liability for an injury lawsuit.
However, workers’ compensation only covers injuries that occur on the job. Disability insurance, on the other hand, is much more comprehensive and can cover disabilities that result from accidents off the job. For example, if someone gets hurt while at home working in the garage, and faces a long recovery period, they can file a disability claim for income support. The coverage will enable them to avoid financial hardship just because a problem in another part of their life forces them off the job.
Disability insurance policies can provide both short-term and long-term financial benefits, and each can help someone with a disability replace income that was lost due to not being able to work. Depending on the nature of the injury and the terms within the policy, the payout from the plan will vary. However, the benefits will be calculated with the intention of helping those who can’t make their normal paycheck still receive income support.
An employer’s group disability insurance plan is often more affordable than a stand-alone plan, which can substantially lessen the employee’s out-of-pocket cost for an essential benefit. Generally, the employer pays for this benefit however, it can be offered on a voluntary basis. Therefore, by offering a group disability plan, you offer your employee better security and support for any disability that they might sustain, which can go a long way towards aiding them in their recovery.