An individual DI policy is applied for and paid for by the individual rather than through the employer as for group DI. Premiums are paid with after-tax dollars, and benefits are not income taxable.

  • Connecticut Minimum Benefit Standards
    • Benefits are payable after an insured’s age 62 that are reduced solely on the basis of age must be at least 50% of the amount payable prior to age 62
    • Elimination periods may not exceed the greater of 90 days in policies with a benefit period of 1 year or less, 180 days in policies with a benefit period between 1 and 2 years, and 365 days for policies with a benefit period of 2 years or more
    • The benefit period must be at least 6 months (1 month for disabilities arising out of pregnancy, childbirth, or miscarriage)
    • Once benefits commence, no reductions in the benefit amount may be made in response to an increase in Social Security benefits
  • Basic Total Disability
    • Total Disability plan protects the family or an individual against the economic loss that comes with the total disability of the wage earner
    • Income Benefits(Monthly Indemnity)
      • Most often, benefits are paid monthly and the amount of the benefit is stated in the policy and is usually limited to a percentage of one’s income at the time of application to prevent overinsurance
    • Elimination and Benefit Periods
      • There is a waiting period that is imposed on the insured from the onset of disability until benefit payments commence. It is a deductible measured in days, instead of dollars
      • This purpose is to eliminate coverage for short-term disabilities in which the insured will be able to return to work in a relatively short period of time
      • The benefit period refers to the length of time over which the monthly disability benefit payments will last for each disability after the elimination period has been satisfied. The longer the lifetime benefit the higher the premium
    • Injury vs. Sickness
      • Injury
        • Accidental bodily injury
          • Damage to the body is unexpected and unintended
        • Accidental means
          • The cause of the accident must be unexpected and unintended
        • A policy that uses the accidental bodily injury definition will provide broader coverage than a policy that uses the accidental means definition
      • Sickness
        • Defined as either a sickness or disease contracted after the policy has been in force at least 30 days
      • Often, the insurance company will allow the insured to have different benefit periods for injury and sickness.
    • Recurrent Disability
      • Specifies the period of time (usually within 3-6 months), during which the recurrence of an injury or illness will be considered as a continuation of a prior period of disability
      • It will not be considered to be a new period of disability so that the insured is not subjected to another elimination period
    • Wavier of Premium
      • Allows the insured, when disabled, to forego paying the premiums once he/she qualifies for benefits. Premiums paid by the insured during the elimination period are usually refunded once the insured qualifies to begin receiving benefits

At Work Benefits

Insurance companies provide some benefits to help insureds that have been disabled get back to work.

  • Partial Disability Benefit
    • Inability to perform one or more of the regular duties of one’s own occupation or the inability to work on a full-time basis
    • Cover a partial loss of income, typically 50% of the total disability benefit and is limited to a certain period of time
  • Residual Disability Benefit
    • Provides benefits for loss of income when a person returns to work after a total disability, but is still not able to work as long or at the same level he/she worked before becoming disabled
    • Will make up the difference between their present earnings and what they were earning prior to disability