Principles of Risk Management and Insurance, 13th Edition

Group Disability-Income Insurance

Group disability-income insurance pays weekly or monthly cash payments to employees who are disabled from accidents or sickness. There are two basic types of plans: (1) short-term plans and (2) long-term plans.

Short-Term Plans

Many employers have short-term plans that pay disability benefits for relatively short periods that generally range from 13 weeks to 52 weeks. The benefits are based on earnings and typically replace 50 to 66.7 percent of normal earnings up to some maximum weekly or monthly limit.

The majority of short-term plans pay benefits for a maximum period of 13 or 26 weeks. In addition, most plans have a short elimination period of 1 to 7 days for sickness, whereas accidents are typically covered ...