Employee Benefits – Disability Insurance

You’ve carefully prepared your resume and researched the company and hiring manager before crafting the perfect cover letter. You hold your breath, hit the send button and then you wait. After what seems like an eternity, you get an email asking you to come in for an interview – this is good.

You put on your Sunday best and practice your firmest handshake. The interview is long but for you it seemed like it was over in a flash; the good news is that you got the job.

At this point, what usually happens is that employers will send you an employment contract and some paperwork. Buried within that pile of paperwork would be some documents that outline your employee benefits. That is if you’re lucky enough to have any. In Hong Kong, employers are only required to provide you with EC insurance which pays if you’re injured on the job.

We write a lot of content from an employer’s prospective but this time, we wanted to write something for the employees and job seekers out there. In a 3 part series, we’ll be going over 3 types of employee benefits: health insurance, disability insurance and life insurance.

Here are some things to keep in mind when evaluating a job offer’s disability insurance clause.

What sort of coverage is provided by the Employees Compensation Ordinance?

In Hong Kong, all employers must carry Employee Compensation (EC) insurance. This insurance provides payment to employees who suffer bodily injury or death due to some accident or disease while in the course of their work duties. The minimum limit required by the ordinance is HK$100 million to HK$200 million depending on the size of your company.

What does my employer-provided Disability Insurance cover?

The problem is that most basic disability coverage is not robust enough. The usual coverage in Hong Kong equates to about 12 to 24 months salary. Depending on how much money you make, the limits might not be high enough and coverage might be limited. We recommend topping up this coverage with your own policy and a limit equal to 3-4 years’ salary.

This ensures that you have enough disability insurance to sustain you through a long illness or injury. The last thing you want to do while recovering is worrying about your finances.

Do they provide Critical Illness (CI) insurance?

Critical Illness insurance policies pay you a lump-sum benefit if you are diagnosed with a critical illness that is listed on the policy. This payment can be used in any way you see fit: to pay for living expenses or for medical treatment.

Most employers will provide you with some kind of Critical Illness coverage but often with some strict limitations in what’s known as Simplified CI. One glaring omission from Simplified CI is the lack of coverage for cancer.

Another important consideration

Another important consideration beyond the coverage and limitations of your employer’s Disability Insurance is whether they will continue their payments even when you’re no longer employed. Most will not. For this reason, it is usually better to buy some top-up coverage in your own name to make sure you have the proper protection even after your employer cuts you off.

If you have any questions about how to increase your level of protection or need help decoding the disability coverage your employer is providing, get in touch with an insurance advisor. We’ll be happy to help.