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Comparing disability insurance benefits

What will you do in the event that you are unable to work as a result of an illness or disability? This is a very financially tough time for employers and employees alike. The good news is that there are two types of insurance benefits that can assist in the event of an employee becoming disabled and unable to work either temporarily or permanently.


The two main types of disability insurance for employer groups are an income protection benefit or a lump sum benefit.

A disability income benefit provides the insured individual with a regular stream of income if they are unable to perform their job function due to disability or illness. This benefit is paid out in monthly instalments and typically covers a certain percentage (often 75%) of the member’s pre-disability income.

The benefit paid is not subject to tax and so in most cases, the individual will receive the same net salary (or very close) to the net salary they were receiving while working.

Should the individual recover sufficiently to return to work, the insurance benefit would stop and the individual would return to work.

This benefit is meant to provide ongoing financial support to disabled members, until the member reaches retirement age, return to work, or passes away.

The amount of the benefit is typically based on the individual’s income prior to their disability.

A lump sum (capital) disability benefit is a lump sum payment made to the insured member if they become permanently disabled and unable to perform their job.

The benefit is defined as a multiple of annual salary and paid as a once-off lump sum value.

This benefit is intended to help cover the costs associated with long-term care, rehabilitation, and other expenses that may arise due to the disability.

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