Disability income replacement insurance: A critical component to a comprehensive benefit plan

Many employers in China understand that protecting an employee’s family in case of death is a critical employee benefit. However, were you aware that it is much more likely an employee will become disabled?

In fact, according to the Council for Disability Awareness (CDA) PDQ disability risk calculator in the United States:

A typical female, age 35, 163cm tall, 57kg, non-smoker, who works mostly an office job, with some outdoor physical responsibilities, and who leads a healthy lifestyle has the following risks:

A 24% chance of becoming disabled for three months or longer during her working career,
– with a 38% chance that the disability would last five years or longer,
– and with the average disability for someone like her lasting 82 months.

If this same person used tobacco and weighed 73kg, the risk would increase to a 41% chance of becoming disabled for three months or longer.

In addition, a typical male, age 35, 178cm tall, 77kg, non-smoker, who works an office job, with some outdoor physical responsibilities, and who leads a healthy lifestyle has the following risks:

A 21% chance of becoming disabled for three months or longer during his working career,
– with a 38% chance that the disability would last five years or longer,
– and with the average disability for someone like him lasting 82 months.

If this same person used tobacco and weighed 95kg, the risk would increase to a 45% chance of becoming disabled for three months or longer.

What is disability income replacement insurance?

This is insurance that replaces lost income in the event that an accident or sickness prevents an individual from working. When such an event occurs, the ability to pay living expenses, rent/mortgage, school tuition, etc. is hampered. In particular, a long-term illness extending many months or years can be devastating to a family’s economic health. In the years up to age 65, an employee is far more likely to have a disability event than to die. Yet, life insurance is far more common than disability insurance.

Protecting one’s income should be of great importance to employers and employees in China and globally. As one cannot purchase life insurance after dying, one cannot purchase disability insurance once they are disabled.

Therefore employers looking to attract and retain the best employees should greatly consider implementing a group disability income replacement policy. A disability income replacement policy pays a benefit whereby an injured or ill employee receives a monthly income payment to replace a percentage of his/her lost salary, typically 60% to 80% of salary.

Global case study: Why do your employees need this coverage?

Celina works for a corporation as a product trainer for new employees. She is in a car accident and suffers a severe injury to her neck and throat. As a result, she is unable to speak and perform the duties of her own occupation. Fortunately for Celina, her employer had purchased a group disability income replacement policy through One World Cover and Global Benefits Group’s Shanghai GBG Enterprise Management Consulting Co. Ltd. (GBGS). With proper medical certification, GBGS was able to pay Celina 70% of her salary on a monthly basis, enabling her to maintain her lifestyle and protect her family.

One of the critical elements in evaluating a disability plan is the definition of “disability”.A typical definition is: the inability to perform all the primary duties of your own occupation as determined by education, experience, and training. This definition typically applies for the first two years of disability, and is then followed in the remaining years by: the inability to perform any gainful occupation.

However, the GBGS standard plan available through One World Cover in China offers an “own occupation” disability definition until normal retirement age (other options are available as well), as did Celina’s plan. Therefore since she could not perform the duties of her “own occupation”, Celina can receive her benefit until normal retirement age, and was not forced to work at “any gainful occupation” after two years. This disability definition is a critical component of one’s policy and one reason why the GBGS standard plan in China is superior to others.

If Celina did not have a disability income plan through her employer, or had coverage with an international insurance provider that offered worse terms as mentioned above, she and her family would have suffered greatly. In the US, according to the CDA, medical problems contributed to 62% of all personal bankruptcies filed in 2007.

Why has One World Cover partnered with GBGS and Taiping General?

Global Benefits Group has over 15 years’ experience providing disability income replacement plans on a global basis. In China, GBGS partners with Taiping General, a leading state-owned insurance company, for health and disability income plans.

The Taiping General Disability Income policy, admitted in China and managed by GBGS, not only offers employers (companies, international schools, government entities, etc.) a more protective disability definition, but the policy also offers the following features which differentiate this plan from others available in the China market today:

No individual applications required
Some carriers require updated medical condition application forms from every employee upon policy inception and renewal – even if one’s benefits are below the free cover or non-medical evidence limits. This is extremely time-consuming and burdensome for employers and employees, as the policy may not automatically renew. With this new and improved disability income plan from Taiping General and GBGS, one is not required to complete an individual application under the free cover level or non-medical evidence limit.

Rich and flexible benefit limits
Further to this, GBGS offers a free cover level or non-medical evidence limit that can be double that offered by many insurance companies. Further to this, on a case-by-case basis, this limit can be increased greatly for large compulsory groups that qualify.

Customizable benefit periods
GBGS also offers various benefit duration options for standard plans, and can customize programs for larger employers.

Available for small businesses too
The GBGS plan is available to compulsory groups of at least 5 employees.

One World Cover is proud to partner with GBGS and Taiping General. We are confident they provide the most comprehensive disability income replacement plan in the China market today.

To get your employees covered for disability income replacement, please directly contact us at +86 21 5100 1960 to speak with an expert One World Cover insurance consultant.