Should Our Benefits Package Include Disability Insurance?

August 27, 2025

The Importance of Disability Insurance in a Benefits Package

When people think about employee benefits, health insurance is usually the first thing that comes to mind. But what happens if an employee becomes too sick or injured to work? That’s where disability insurance plays a critical role. It provides income protection when employees need it most.

What Is Disability Insurance?

Disability insurance replaces a portion of an employee’s income if they are unable to work due to illness, injury, or pregnancy. There are two main types:

Short-Term Disability covers temporary disabilities, usually for a period of a few weeks up to 3–6 months.
Long-Term Disability provides income replacement for extended periods, often until the employee can return to work or reaches retirement age.

Why It Matters

Financial Protection. Most Americans don’t have enough savings to cover more than a few months without income.
Peace of Mind. Employees know they’ll have financial stability if the unexpected happens.
Employer Value. Offering disability insurance shows you care about your employees’ financial well-being beyond just medical coverage.

Employer Options

Employer-Paid Plans. The company pays the premium, offering disability insurance as a core benefit.
Voluntary Plans. Employees can opt in and pay for coverage at group-discounted rates through payroll deduction.
Hybrid Approach. Employers cover short-term disability while offering voluntary long-term options.

Best Practices

Educate employees about how disability insurance works—many don’t realize it’s different from workers’ comp.
Highlight real-world examples (e.g., maternity leave or recovery from surgery).
Ensure your plan is easy to understand, with clear definitions of coverage and waiting periods.