You’re not covered without proper ingredients

Recently my wife bought some hotdogs for a family event we were having. I noticed she had purchased a different brand than usual. When I asked her about the change she replied that it was because she found better ingredients in the new brand as compared to the original hotdog brand.

This difference in the quality of hotdogs made me think of insurance benefits provided by many employer sponsored plans. Over the years I have noticed many clients truly believe their employer has them covered for their insurance requirements. I also have seen many employers believe they have looked after the best interest of their employees.

However when it comes to longterm disability benefits there are a few ingredients to look for to ensure that you have the proper outcomes. Just like a hotdog, you can have many ingredients but a few of them can throw off the quality, flavour and ultimately your experience.

I recall a local company had their employees pay the premiums on covering 50% of their base salary. As part of employer paid benefits, the employee had the option to add another level of coverage on or choose among other elected perks. Initially this sounds great but when we looked at the employee’s taxable rates and the consequences of having taxable disability coverage, the employees would have netted a lower amount than the 50% they were initially paying for themselves. For these employees, I recommended they get personally owned disability insurance that would not integrate or be affected by their work plan benefits.

Another ingredient that I just reviewed for a client this past week pertains to the integration of government benefits. He is in the disability claim process as we speak and when I looked into his employee benefits booklet, the fine print declared that government benefits would be integrated, which means that his coverage would be reduced by the amount of the government benefits. Overall the person will get the same coverage; it just means that they will not be getting a greater benefit. Not all work plans integrate. This is worth reviewing.

One last ingredient that I also dealt with this last month was the accumulation of days when going on claim. When a person is injured or ill there is a certain amount of time from the onset of disability to the time when the benefit is paid. Some plans will allow an accumulation of days which means that they will add up any partial or full days of absence in order to total your elimination period before you get paid coverage. On the flip side there may not be an accumulation of days rather a requirement for consecutive days of injury or illness before a claim is paid. This is significantly different since if a person does not hit their full consecutive days before going back to work, even for part of the day, then the count for the number of days resets back to zero.

What I have shared above is only a few of the ingredients that go into an individual’s long-term disability benefits at work. You can request a very detailed benefit booklet with full definitions from your employer. I encourage you to work with your professional team of advisors to do a full review and analysis of your work based benefits. Just like hotdogs it's worth reading and becoming familiar with the ingredients. My experience with both is that you get what you pay for and if you try to skimp on the front-end you can have a really bad experience on the backend.

Steve Meldrum B.Mgt. CFP CLU is the founder of Swell Private Wealth Ltd. For over a decade he has specialized in helping individuals and businesses expand protect and perpetuate their wealth. For further information or tailored advice, contact him at 403-487-0490, steve@swellwealth.com or connect on social media.