Having an insurance plan be sold on an individual basis can mean a few different things. But most importantly it means that the plan is customizable to the person buying the policy. Buying a short-term disability policy on an individual basis is no different.
There may be certain riders, provisions, or policy features that you do or do not want that your coworkers would disagree with you about whether those options would also be best for them. To resolve this, while the insurance might be bought through the workplace, the individual policies are geared toward the individuals buying them.
Why Is This Beneficial (or not Beneficial)?
Having your independent insurance agent run a check against what the policy prices and features are like in an individual policy versus what they are in a group plan is an easy way to see what would work best for either you or your employees, depending on who’s planning on buying the insurance.
Of course, as with most products you buy, it’s not just about price. The features attached to the insurance plan bought on an individual basis are more easily customized, meaning you can pick and choose what you get. You may want insurance policies that have low deductibles or low premiums or a multitude of different options.
Consequently, because you’re picking features you do want and removing those you don’t want, it means you’re only paying for those that you do want. This can mean substantial savings compared to policies sold not on individual bases.
When Might It Be Beneficial to Have Group Insurance?
There are two main circumstances where group insurance may make more sense to purchase than individual policies. The first is when preexisting conditions may be a concern, and that is because historically individual policies required individual underwriting by the insurance companies in most states.
Because group insurance is spreading out the risk over more people, some companies may forgo individual underwriting, making it easier to become insured despite a preexisting condition that may otherwise have been a concern.
The other instance where group insurance may be more beneficial to the insured is when greater coverage is needed. Group health insurance traditionally covered more than individual policies.
Disclaimer: This information does not constitute financial advice. For specific information for short-term disability policy plans and features, consult your local insurance agent.