Disability Insurance Basics
What is the difference between group and individual disability insurance?
Group disability insurance is provided through an employer and is typically less expensive. However, group disability is not portable, uses an any-occupation definition after 2 years, and benefits are taxable if the employer pays the premium. Individual disability insurance is portable, can use an own-occupation definition, and benefits are tax-free if you pay the premium.
Key Points
- Group disability: employer-provided, less expensive, not portable
- Individual disability: portable, own-occupation definition available
- Group disability benefits: taxable if employer pays the premium
- Individual disability benefits: tax-free if you pay the premium with after-tax dollars
- Individual disability supplements group coverage