Individual Disability Insurance

Individual disability insurance provides better coverage than group disability insurance, but it is also more expensive. If possible, obtain a contract that is "non-cancellable and guaranteed renewable to age 65." This all-important phrase means that the disability insurance provider cannot cancel your coverage except for non-payment of premiums, and that the present rates will be in effect until age 65.

On the other hand, group plans can cancel you on any anniversary date, and will probably raise premiums each year. Keep in mind that group policies end when you resign from your organization, but individual plans follow you. If your employer offers group coverage, and that is all you can afford, it most certainly is better than having no coverage at all.

Individual Policies Are Better

Individual insurance does not integrate with other coverage or benefits, such as Social Security. Group plans integrate with all other benefits, regardless of the source. This means that individual benefits are not offset by any other coverage you might have.

Always examine the definition of disability carefully because this will determine several important aspects of your benefits. The most favorable for the wage earner is "own occupation," which means you receive benefits as long as you cannot participate in your own career choice. Even if you go into another line of work, you still receive the benefits from your individual disability insurance policy.