What is Disability Illness Insurance?

 According to the reports, 25% of all 20-year-olds  become disabled and are unable to work even before reaching the age of 67. Many people don’t know that there are insurance products designed to replace a portion of their income when they become ill or disabled and cannot work.


What Is Disability Illness Insurance?

Disability Illness insurance is the insurance provided in the event that an employee is disabled and cannot work. Unlike workers’ compensation insurance — which provides compensation like partial wage replacement if employees get hurt on the clock — disability insurance provides partial wage replacement when employees become disabled from work, and can’t work.


Health insurance benefits is for employees who seek needed medical care. Disability Illness insurance Kitchener replaces a portion of employee income when they can’t work because of an illness or disability.


For the most part, disability insurance Kitchener will not replace all of someone’s income. Instead, disability insurance provides wage replacement benefits that cover, on average, up to 60% of employee earnings. Those payments usually go up to a cap, or a maximum monthly payout. Although that’s not ideal, receiving up to 60% of wages is still better than 0% — and having that income stream can be very important to an employee and their family.


Long-Term vs. Short-Term

There are two types of disability insurance Kitchener: short- and long-term. Short-term disability insurance typically pays out a portion of employee’s income from 9 to 52 weeks depending on the plan. Short-term disability benefits generally kick in after a waiting, or “elimination” period, which is usually set from seven to 14 days.


Under certain circumstances, there will not be a waiting period. The applicable plan document should provide information about a waiting or “elimination period.”


Long-term disability picks up where short-term disability leaves off. Long-term disability insurance usually provides about 50-60% of an employee’s base wages. There are long-term disability plans that pay out partial wage replacement benefits until a certain age, such as 65 years old.


Some private companies in Kitchener offer both short-term and long-term disability insurance plans, whereas others leave people to buy plans as an individual.


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Should My Company Offer Disability Insurance ?

Some states have state-mandated disability insurance requirements so you’ll need to see what is required in your area. If you have employees in one of those states, it is important that you understand how to comply with the law.


What about if you aren’t required to offer disability insurance Kitchener? Should you?


It depends. It’s an additional cost to your business and if you can’t afford it, it’s obviously not a good idea. The benefit , however might act as an additional motivator to attract and retain skilled, talented employees. For example, disability insurance Kitchener covers part of women’s pay during pregnancy and maternity leave.


Employees that want to take time off for pregnancy or a new baby may consider this.

For example, a short-term disability insurance policy Kitchener will only pay benefits if you are disabled due to the pregnancy. The typical timeframe that you’re considered disabled following delivery of the baby, without complications, is six weeks; eight weeks if a C-section was performed. Benefits are paid before the delivery of the child if your doctor has put you on bed rest due to the pregnancy.


However, let’s say your business can’t afford it. You may offer STD or LTD as a voluntary benefit. This means you’ll facilitate the purchase of the insurance, but the employees are responsible for paying the entire premium. This small amount of money will be taken out of the employee’s paycheck to cover the cost of the insurance premium.


If you decide to offer disability insurance Kitchener, let employees know how important wage replacement can be if they’re ever disabled and cannot work. Even though the benefit will not cover 100% of the employee’s base wages, having some money coming in each month will help your employees

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