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Individual/group disability policy alternatives

Policy type Description Conditions Advantages Disadvantages
Individual policy A policy you buy through your insurance agent that pays you disability benefits when you are sick or injured You must meet the underwriting criteria set by the insurance company for occupation, health, habits, avocations, etc.

Benefits are tax free if premiums paid with after-tax dollars

Flexible policy benefits and features such as lifetime benefits, cost-of-living increases, partial benefits, etc.

Provides the most comprehensive coverage

Premiums generally can't increase

Generally, you can't lose coverage if you pay the premiums

Most expensive type
Group policy issued through an employer A disability benefit you receive through your employer. Your employer may or may not pay part of the premiums You have to be a member of the group (in this case, a group of employees) that sponsors the insurance

Low group premium

Available as short- or long-term coverage (or both)

Usually, you don't have to prove insurability

Less flexible benefit design than individual disability policies

Will terminate when employment ends (non-portable)

Premium will increase as you get older

Definition of disability may be less liberal than individual coverage

Benefits will be offset by Social Security, workers' compensation, and some other types of disability insurance

Group policy issued through an association or organization A disability policy purchased through an association or organization, such as the New Hampshire Realtors Association You must be a member of the group that sponsors the insurance (in this case, a trade association or organization)

Low group premium

May have more liberal underwriting requirements, although not guaranteed acceptance as with employer groups

Less flexible benefit design than individual disability policies

Definition of disability may be less liberal than individual coverage

Contracts may be cancelable by insurance company or association

Premium will increase as you get older