What is the difference between individual disability policies and group disability policies?
The major difference between individual and group policies is that individual policies are underwritten with respect to the individual purchasing insurance coverage, while group policies are not individually underwritten. Instead, group policies are issued by disability insurance companies based on certain underwriting assumptions related to the general health of a group of people. Individual policies are typically bought and paid for by the insured, separate and apart from an employer. Group coverage, on the other hand, is usually offered by an employer or union, and the premiums are paid (in whole or in part) by the employer. There may be circumstances where an employer will purchase and pay the premiums for an individual policy on behalf of an employee. Conversely, an individual may personally obtain group LTD coverage unrelated to his or her employment by joining a group which has group coverage available for its members.