Insurance World

To discuss the terminology Group Health Insurance, we must first familiarize ourselves with the concepts Insurance and Health Insurance.

Insurance is a kind of protection, a safety net against unforeseeable losses. No one knows what the future holds, and insurance is a good way of preparing for what may come. Health insurance is a protection against medical costs. The insurer pays the cost of the insured person if the latter falls ill - due to accident maybe, or any of the covered causes. Magnify the health insurance more than ten times over and you get the Group Health Insurance.

Group Health Insurance is a health coverage based on a group of people under a company or an organization. The cost of the insurance is allotted among the members of this group. The group enjoys a wide range of benefits of Group Health Insurance. A master contract or policy is issued to their employer or to any of the group’s affiliations.

Health insurance is one of the most important benefits offered to an employee through their employers. Not only does an employee feel secure with this insurance, he also feels assured of the care of his employers. Companies spend billions annually for health insurance, and group health insurance make up the bulk of the revenues earned by health insurance companies.

Group health insurance can be availed by any company with two or more employees. Requirements vary around the world, though one constant requirement is the proof of legitimacy of the company’s operation. The number of employees to be insured under the group plan determines the type of coverage available to the employer. A company with more than a thousand employees will have customized health plans, and these may include additional benefits.

With the rising costs of prescription drugs and health care in recent years, companies have experienced a drastic increase in the cost of providing health care benefits to their employees. Many companies are forced to cut back on the benefits of the health plan, and some even require their employees to pay a higher share of the monthly premium of the insurance, even to the point of requiring them to pay the 100% of the dependent premium! Decreases in the health insurance benefits cause some employees to pay medical expenses themselves when they require medical treatment or prescription drugs. Businesses offering full premium payment for employees and their dependents are fast decreasing.

How long could you and your family get by without your income? A month? Maybe three? What would happen if you were unable to work for a year or more? The simple fact is that most of us don’t have the cash reserves to weather an unexpected loss of income in the event a serious injury or illness prevents us from working. And besides, you don’t want to deplete the money you’ve been saving for retirement or your children’s education just to keep the bank from foreclosing on your house.

Think you don’t need disability insurance? You’re healthy and you don’t work in a high-risk occupation, right? So what’s the chance anything could happen? According to a Gallup survey, most people estimate they have only a 16 percent chance of becoming disabled during their working years. But statistics show that a 35-year-old individual has a 50 percent chance of incurring a disability for 90 days or more before they turn 65.

You can’t predict when you’ll need disability insurance or why. But consider that back disorders are the most commonly cited conditions that cause working limitations, followed by heart disease and arthritis.

“Disability insurance protects your family’s financial security. Plus, benefits can be paid directly to you – you can receive a benefits check made out to your name, which you can then use to pay for your living expenses,” said Brad Buechler, first vice president and actuary at Mutual of Omaha. He pointed out that almost 50 percent of all residential mortgage foreclosures are brought about by a disability.

Even if you have long-term disability insurance through your employer, you may want to consider an individual policy as well. Group long-term disability insurance benefits offered through employers typically guarantee replacement of 50 to 60 percent of your salary and begin when sick leave and short-term disability benefits stop. This may not be enough to meet your needs in the event of disability. Also keep in mind that benefits from an employer-paid plan generally are taxable, while individual policies pay benefits free of income tax. Finally, individual coverages are portable and don’t automatically terminate if you change jobs, unlike group coverages obtained through your employer.

To determine if an individual disability policy is right for you, figure out if the total benefit from your group policy would be enough to support you and your family. Typical expenses for most families include groceries, mortgage payments or rent, utility bills, car payments and clothing. Make a list of your expenses and then ask yourself the following questions:

* Do I have disability insurance through my employer? If so, are the benefits sufficient to allow me to maintain my standard of living if I become disabled?

* If my current benefits are not sufficient, what expenses will I cut if my income is reduced by half?

* What other sources of income do I have in the event I can’t work?

* Would my spouse’s income be sufficient to pay my family’s bills?

A good rule of thumb, according to Mutual of Omaha’s Buechler, is to allocate 1 to 2 percent of your income for supplemental insurance, such as disability coverage. The cost of an individual disability policy is reasonable, especially when you consider what is at stake if you don’t have the coverage and become disabled, a much more likely event than most people realize.