Your employees depend on their paychecks, but, on their own, they may be unable to secure the individual disability insurance they need to protect their paychecks. Employers can help by offering guaranteed standard issue (GSI) disability insurance to groups of employees. Guaranteed issue disability insurance is a long-term multi-life disability insurance option designed to cover groups of employees. If you have five or more employees, you can cover everyone in the group at once with this convenient and affordable multi-life disability insurance option.

 
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Is Guaranteed Issue the Same as Group Long-Term Disability Insurance?

  • Guaranteed standard issue disability insurance is different from group long-term disability insurance.
  • Although both of these income replacement options insure groups of employees, there are some key distinctions. For one thing, individual employees own their guaranteed standard issue disability insurance. Plus, as the coverage is portable, employees can keep it if they switch jobs. This is not normally the case with group long-term disability insurance, which employees typically lose when switching jobs. Guaranteed issue disability insurance can also offer better coverage than group long-term disability insurance.
  • Group long-term disability insurance can be an affordable option when you have a large number of workers. However, workers who need more robust coverage may be more interested in guaranteed issue disability income insurance.

Guaranteed Issue Disability Insurance vs. Individual Disability Insurance

  • Guaranteed standard issue disability insurance is not quite the same as an individual disability insurance policy.
  • Both guaranteed standard issue disability insurance and individual disability insurance offer long-term disability insurance coverage. However, the guaranteed standard issue benefit period may be shorter than what some individual disability insurance policies offer.
  • Guaranteed standard issue disability insurance also has less flexibility. Since everyone receives coverage from the same insurance company and the benefit levels are predetermined, individual policyholders are unable to adjust their coverage levels to meet their needs and budgets. Plus, GSI disability insurance policyholders may be unable to select all the riders they want (as they would with individual disability insurance), although some attractive riders are available.
  • At this point, you might be wondering why anyone would choose guaranteed standard issue disability insurance over individual disability insurance. There’s actually a good reason: GSI disability insurance is available with virtually no underwriting. Applicants don’t have to submit to medical exams or blood tests to secure coverage – this is why it’s called guaranteed.
  • This removes a common barrier to disability income coverage. Many people realize they should take out coverage, but, as they don’t want to deal with the hassle of medical underwriting, they never submit an application. With a GSI program, you don’t need to worry about this.
  • Another advantage to guaranteed standard issue disability income insurance is it often comes with significant discounts. Although paycheck protection offers good value, many people underestimate the risk of disability or mistakenly believe they will never experience a disability themselves. In addition, they sometimes balk at the cost of coverage. Multi-life discounts make coverage more affordable, which can boost enrollment rates.

Many Americans Have Pre-Existing Conditions

Millions of Americans, including many working-age Americans, have pre-existing health conditions.

  • The Department of Health and Human Services (HHS) says that between 50 and 129 million non-elderly Americans have pre-existing conditions.
  • The CDC says that more than 100 million U.S. adults have diabetes or prediabetes. Among people between the ages of 45 and 64, 17% have diabetes.
  • The National Cancer Institute says there are approximately 16.9 million cancer survivors in the U.S. and that this number is expected to rise to 22.2 million by 2030.
  • The American Heart Association says that 121.5 million adults in the U.S. – that’s nearly half – have some form of cardiovascular disease.

Medical underwriting can be a scary prospect for the millions of Americans with pre-existing conditions. When people apply for individual disability insurance, they often have to go through a medical underwriting process that involves medical records, questions, and tests.

Having a pre-existing condition does not mean that a person cannot find individual disability insurance coverage. There are options, including simplified issue disability insurance. In fact, some carriers may be willing to extend coverage. However, coverage may be more expensive and more limited. Furthermore, the fear of underwriting may keep some individuals with pre-existing conditions from even trying to secure income replacement insurance.

GSI disability insurance provides the solution. Given the extreme prevalence of pre-existing conditions, the odds are high that at least some individuals within a group of five or more employees will have pre-existing conditions. Guaranteed standard issue disability insurance is a great way to help these workers gain the coverage they need to protect their incomes.

 

Benefit Programs for Highly-Compensated Employees

  • Group long-term disability insurance provides some income protection, but it may not provide enough coverage, especially for highly-compensated employees.
  • A typical group long-term disability insurance policy might replace around 60% of a person’s income. That’s a big pay cut. Furthermore, the benefit is usually subject to income tax. For top earners, the situation is even worse due to common monthly benefit caps. These caps mean that top earners may actually receive less than 60% of their previous income and still have to pay income tax. This drastic drop in income can cause financial hardship and necessitate major lifestyle changes.
  • Guaranteed standard issue disability insurance can provide better coverage for highly-compensated employees. Employers can use IRS Code 162 to offer coverage as part of their compensation packages. This can be an excellent strategy to reward top employees. Plus, employers can write off premiums and other expenses related to providing coverage, as long as total compensation remains reasonable.

Guaranteed Standard Issue Disability Insurance Can Help Your Company Stand Out

  • Offering guaranteed standard issue disability insurance is one way employers can stand out in the labor market. This can be a powerful tool in an employer’s recruitment and retention strategy.
  • Companies are always competing for top talent. Since the best workers are in high demand, employers need to offer competitive compensation packages to make their companies enticing places to work.
  • Benefits are an important part of the total compensation package. In addition to things like health, vision, dental, life, and critical illness insurance, employers should offer appealing disability insurance options. As group long-term disability insurance may not meet the needs of highly-compensated employees, guaranteed standard issue disability income insurance is an important benefit.

A disability insurance agent can help you explore your options. Find an agent.

If you’re an insurance agent looking for great coverage options from top disability insurance companies, DIS can help. Request a quote.

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