Are you confused about the differences between group and individual disability insurance coverage? You’re not alone. Understanding the nuances of these insurance options can be daunting, but we can help you understand the differences and why it is almost always better to have an individual policy.<\/p>\n\n\n\n
A major difference is that individual policies<\/a> are underwritten for the individual purchasing insurance coverage, while group policies<\/a> 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.<\/p>\n\n\n\n Individual policies are typically procured and paid for by the policyholder independently of their employer. Conversely, group insurance is commonly provided by an employer or union, with premiums<\/a> usually paid, either fully or partially, by the employer. There may be situations where an employer procures and covers the premiums for a personal policy on behalf of an employee. <\/p>\n\n\n\n Alternatively, an individual might independently secure group long-term disability (LTD) coverage by becoming a member of a group that offers such coverage to its members. If you pay the insurance premiums independently, your monthly benefits are usually tax-free<\/a>. But if your employer pays the premiums, you may be required to pay taxes on the benefits you receive.<\/p>\n\n\n\n When insurance coverage is provided under a group policy by the insured’s employer, the policy is likely regulated by the Employee Retirement Income Security Act (ERISA)<\/a>. Policies regulated by ERISA supersede certain state laws designed to protect consumers. Significant differences exist between a lawsuit connected to an ERISA LTD plan and an individual disability income policy. <\/p>\n\n\n\n The plaintiff is entitled to a jury trial in state court for individual policy lawsuits. An ERISA claimant, however, does not have this entitlement. A federal judge determines the outcome of an ERISA disability lawsuit, usually after both parties have submitted written briefs supporting their arguments for summary judgment.<\/p>\n\n\n\n Furthermore, in a state court lawsuit concerning a wrongful denial of benefits under an individual disability insurance policy, the plaintiff might be eligible to pursue additional damages for the insurance company’s bad faith<\/a>. If ERISA regulates the LTD plan, the insurance company faces no risk of bad faith or punitive damage claims for wrongful denial of LTD benefits in a group plan ERISA claim, providing no significant incentive to settle the claim. <\/p>\n\n\n\n If the claimant wins a federal ERISA lawsuit, the insurance company’s potential liabilities are limited to paying the claimant’s past-due benefits and, in some cases, interest and attorney fees (though it can be a challenge to obtain an award for attorney fees for the victor in most federal circuits.)<\/p>\n\n\n\nGroup Disability Lawsuits vs. Individual Disability Lawsuits<\/h2><\/p>\n\n\n\n