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Group LTD insurance is a single disability policy that covers many people in a group with a common interest such as an employer, association, school affiliation or fraternal organization of some type.  The master policy represents the group of employees who have a specific relationship with the policy owner, not an individual employee.  The individuals within the group that sign-up 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.

TIP:  Contact your HR department or person in charge of your employee benefits to request and review the details of your group LTD.

Group disability policies often have less (underwriting) requirements than individual disability policies.  That’s because the risk of disability is assumed 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.

Keep in mind all eligible individuals / employees are (guaranteed issue) not subject to any underwriting requirements and will be approved during an open enrollment period with a specific effective date, subject to pre-existing condition limitations.  In other words, you don’t have to show proof that you are healthy or provide any medical tests to be eligible for coverage.  However, if you don’t enroll during an open enrollment period and later decide you want coverage, you may have to prove insurability at that point, or you may have to wait until the next open enrollment period.  This helps to prevent individuals with health problems from enrolling after they have discovered that they’re sick.

Remember the cost of group LTD is usually free (non-contributory) provided by your employer, or very inexpensive (contributory) depending on the size of the group and plan design.   

There are two types of employer-provided disability coverage:  short-term and long-term.  

Short-term disability insurance, which can either be paid by your employer or an insurance company and can cover 60 to 70 percent of your salary and in some situations even 100 percent of your salary for a short-term disability up to 3 or 6 months and is paid prior to the start of your group long-term disability benefits.

TIP:  Make sure you understand how much of your salary is being replaced during a short-term disability.

Long-term disability kicks in, and it typically pays 60 to 70 percent of your salary up to benefit caps from $5,000 to $35,000 per month of disability insurance with benefits normally paid until age 65.  Common waiting periods are either 90 or 180 days and follow your short-term disability benefits.

Group short-term and long-term disability benefits are not created equal and can provide different variations determined by your employer and occupation class of employees.    

I am only going to refer to employer / employee provided group LTD not other types of association, affiliation or organization disability programs.    

While group LTD may be a good benefit for a basic amount of coverage and the majority of employees, for other high income earning executives, business owners and professionals there are many limitations for a variety of reasons.  For more info see “I’m Covered, I Have Group LTD! A Real Cause For Concern. What You Need To Know?”

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Group LTD premiums are much lower because it’s more cost-effective to underwrite this type of insurance for a group rather than for an individual considering individual disability insurance.

Group LTD for someone uninsurable who can’t qualify for an individual policy is a good solution.

Group LTD for someone with pre-existing medical conditions that would be excluded from an individual policy is a good solution.

Group LTD defines pre-existing conditions and when pre-existing conditions can be covered after a period-of-time if you remain on the plan long enough.

Group LTD usually requires no medical underwriting (guaranteed issue), and everyone who opts in will get coverage.

Group LTD for difficult occupations like plumbers or other types of higher risk groups provides a good solution.

Group LTD for a basic amount of coverage is good for all employees.


Marc Maretsky Personal Insurance Services based in Beverly Hills, serves all of California and the United States.  I help my clients acquire life, disability, long-term care, and critical illness insured solutions, as well as enroll them into Medicare when eligible.

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