<img height="1" width="1" src="https://www.facebook.com/tr?id=189745744856551&amp;ev=PageView &amp;noscript=1">

Wendy Matton

Short-Term Income Protection: Weekly Indemnity vs. SUB Plans

 

For employers, there are several options to consider if you wish to provide employees with short-term income protection in the event that they are unable to work due to sickness or a disability.

Weekly indemnity (WI) and supplement to unemployment benefits (SUB) plans have their own unique pros and cons to consider when deciding which plan is the best for your team. Below, we’ll take you through the points for each:

Pros & Cons of Weekly Indemnity Plans

 

Pros:

  • If the employee’s earning warrants it, earnings on a WI plan can be higher than EI or disability
  • Employers who provide WI plans are eligible to apply for EI premium reductions
  • Unlike EI sickness and certain disability benefits, WI claims are adjudicated by the insurance company
  • Benefits are non-taxable if the premiums are fully paid for by the employee

 

Cons:

  • WI plans can be cost-prohibitive on an ongoing basis
  • Premiums are claims-based and may be impacted at renewal

                                   

Pros & Cons of SUB Plans:

 

Pros:

  • Can be used to top up EI payouts (EI has weekly maximums)
  • SUB plans self-fund at time of claim versus needing to pay ongoing premiums
  • There is a higher employee satisfaction with SUB plans as a form of income replacement as it will typically cover a higher percentage of their pay
  • The cost is controlled by the employer and the weekly maximums that they set
  • Usually the most cost-effective long term in comparison to paying WI premiums on an ongoing basis
  • Employers who offer SUB plans are also eligible to apply for EI premium reductions

 

Cons:

  • SUB plans are managed by the employer and are not considered insurance; therefore, claims are not adjudicated

Which one is best for you? There are many factors that come into play when making decisions like these and there is no one size fits all approach. Consulting with a benefits advisor is usually the best course of action as they will take into consideration your business needs and goals before making the recommendation on what route is best for you.

Wendy Matton

Wendy has nearly 40 years of experience in the financial services sector. She began in banking and moved on to Bay St. trading in fixed income, currency and commodities, to management. The next phase was spent in sales and advisory roles as an independent financial and insurance advisor. She has spent the last 15 years as a consultant in the employee benefits industry. Wendy enjoys going on gal-pal road trips with her daughter visiting theatres and B&Bs across Ontario. When not hosting a “Scuff ‘n’ Scoff” with her hubby and musical friends, her most treasured moments are outdoors, back in the hills of Newfoundland on a ski-doo or on a pristine lake with her dad, in a canoe.
Find Wendy Matton on:
Related Posts Plugin for WordPress, Blogger...