Supplemental Disability Insurance? What Is It?

Supplemental disability insurance policies, or “gap insurance”, are disability insurance policies available to individuals that are designed to fill in gaps in coverage that may be provided through an employer-provided disability insurance policy.

What Will It Do For You?

A Supplemental Disability Insurance policy can reduce your risk of severe income loss in several ways:

  • Policies can be written to extend your income coverage to 100% at very affordable rates.
  • Because you pay the premium, all benefits received via the Supplemental policy are tax-free.
  • Gaps in your policy from your job can be identified by your insurance advisor and can be specifically bridged with a Supplemental policy.
  • While group coverage ends when you leave your employer, Supplemental coverage remains with you regardless of who you work for. You won’t have to worry about you coverage ending.

Supplemental Disability Insurance

Supplemental Disability Insurance details

Important Things To Know:

Gaps in a a group or employer-provided Disability Insurance policy typically include:

  • Caps on benefits payable each month, often at $5000-$6000 per month, or sometimes only up to 40%, 50% or 60% of your BASE salary based on the employer’s choice.
    • Supplemental policies can be designed to pay up to 100% of your total taxable earnings in case you cannot do your job due to an accident or an illness.
  • An employer group plan policy will coordinate with other types of compensation awarded at the time of a disability such as Workers’ Compensation or Social Security benefits. However, if you have an individual disability policy, none of the other types of compensation are taken into account, therefore your benefits payable to you are likely to be more than accepting only your employer’s plan if you decide to purchase an individual supplemental insurance plan too.
  • Group policies often do not include coverage for anxiety, depression, drug or alcohol-related disabilities. That means if you have a significant event that causes you not to be able to work due to anxiety or depression, the group policy will not be able to help with your bills. A supplemental disability insurance can be purchased to cover this gap in coverage in case of disability.
  • Group policies are fully taxable as income whereas any benefits received from individually purchased policies will remain tax-free.
  • Group policies end when you leave your employer or group. Supplemental insurance policies end when you stop paying for the insurance.
  • Most importantly group plans are written to pay only if you cannot do any job. Whereas an individual policy will pay when you can not do your job. That is the most important “night & day” difference.
  • Like all insurance and contracts, group policies include fine print that may exclude or limit coverage that you may need given your specific circumstances. Speaking to an expert advisor in disability insurance to uncover your needs and meet them is advised for the best coverage possible.

Create Your Supplemental Disability Insurance Policy Today

If you have a Disability Insurance policy through your job, we highly recommend investing in a Supplemental Disability Insurance policy. It will fully protect you when you really need it.

Our experienced advisors are able to answer all of your questions and help you along the way. We can customize your Supplemental Insurance policy to meet all of your needs and help you achieve full financial protection. Call us at (800) 788-8921 or fill out our brief Contact Form to be called by an advisor directly.