Three Types of Long-Term Disability Insurance

A member of the American Association of Oral and Maxillofacial Surgeons, Christopher C. “Chris” Babcock, MD, DMD, is an experienced oral and maxillofacial surgeon who has been practicing at Louisville Oral Surgery and Dental Implants since 2018. In addition to his medical career, Dr. Christopher C. Babcock has experience as a licensed health and life insurance broker focusing on disability insurance.

A disability insurance plan provides unearned income (benefits) in the event of a debilitating injury. A debilitating injury can be sustained from an accident, a disease (such as cancer), or be mental in nature (such as PTSD from a psychologically stressful experience). Three major types of disability insurance are group disability insurance, employer-sponsored disability insurance, and individual disability insurance.

Professional organizations provide group disability insurance plans. Members who are covered by these plans are qualified to receive short or long-term benefits for disabling injuries. Group disability insurance plans are subject to the Employee Retirement Income Security Act of 1974 (ERISA), which eliminates the right to a jury (in the event of a denial of access to long-term benefits) and necessitates quick reporting of a disabling injury to qualify for benefits.

Employer-sponsored disability insurance is included in some employment benefits packages. Employers who offer these plans assist their employees by contributing money to purchase premiums. Benefits receivable from an employer-sponsored disability insurance plan are taxable. These plans are also subject to ERISA.

When a person outrightly purchases a disability insurance premium out-of-pocket and without affiliation with another entity, the plan is called individual disability insurance. This insurance can provide coverage for debilitating injuries until retirement age. Individual disability insurance benefits are not taxed.