Group Disability Insurance

Group Disability Insurance: How to Get a Group Rate You Can Afford

One of the most common reasons that some employers do not offer disability insurance is because they cannot afford it. This is more of a problem with the smaller companies who have limited budgets and fewer employees that larger companies, so group disability insurance rates tend to be higher because of the number of people that the carrier has the potential to serve. The results are that the company either doesn’t offer disability insurance to its employees, or it relies on the employees to pay the bulk of the coverage, which tends to mean less participation, and therefore, higher premiums again. Surely, there are ways around the problem, people want to know. Yes, there are ways around it, but the insurance companies don’t offer the information. That leaves the small company having to search on its own to find favorable rates for its employees.

How Rates for Group Insurance Are Set

Insurance companies use several factors to determine premiums for group disability insurance, including size of the company, type of business (potential for injuries or illness claims), and the company’s history with lost work hours. With group insurance, the larger the company and the less claims, the lower the premium. If this is the first time the company has attempted to provide group disability insurance to its employees, the insurance company has no history of claims, or injuries and illness of employees, so it has to take an educated and statistical guess based on industry average, which may or may not be accurate for the company in question. The problem is that the insurance company has to go by something, and the only other possibility is if the company keeps records of the employees that were off work for illness or injury off the job so that the insurance company has something as a guide.

Best Rates for Group Disability Insurance

For the small company and especially the small company that has no prior experience with group disability insurance, there are several ways that you can circumvent the system and obtain a better rate. It’s not illegal, but it requires some cooperation from others who are in the same situation as you are. One of the things you can do is join an organization that is geared toward something related to your business, and who offers group insurance as part of the membership package. If your company has a labor union that is national or international, the union may be able to set this up for you. Another possibility is to get together with other small business owners who are in similar fields and form an alliance, thus creating a larger company and opening the potential for lower group disability insurance rates. Forming this alliance does not in anyway change the make up of your company; it simply means that you are joining with other companies who are willing to join with you to form a group of small business owners wanting to provide insurance for their employees at a reasonable cost.

The Importance of Group Disability Insurance

Though it seems like a minor thing, to those who have families, having disability insurance is a selling point when applying for a position with a company. In fact, small companies risk losing good employees if they are unable to provide group insurance, including disability, health, and life, at a reasonable rate. For most people today, part of the attraction to a particular company is not as much in the salary as in the benefits package. No, you cannot pay bills with the benefits, however, the benefits certainly save you money when they are needed, and that makes them attractive to a potential employee.