A) The Dutch System
In The Netherlands there are several kind and layers of disability coverages:
- During the first two years the employer has an obligation to pay-out a certain percentage of the gross annual wages;
- After that period there might be a governmental coverage topped up by a corporate coverage.
B) Costs Versus Pensions
In The Netherlands many corporate pension plans have a clause called ‘Premium Exemption In Case Of Disability’.
Which means i.e. that if a participant is sick or disabled for a longer time and for at least 80%, that the pension provider will finance the pension premium. In other words, that the premium costs will not exist for the employer and participant.
A quite different clause is the Disability Pension Clause. Which means that in case of structural and complete sickness or disability, the employee will receive a gross annual disability pension. Which thus provides income.
C) Standard Versus Excedent Coverage
One of the most important distinctions regarding premium costs is:
- The ‘General Coverage’ of 70% of maximum annual gross € 55.000,- ;
- The coverage above that limit (to maximum rounded € 250.000,-) which is called the ‘Excedent Coverage’. Possibly even including an annual indexation as of pay-out, which is a very expensive clause.
In general one can see that the employer pays the Basic Coverage but not the Excedent Coverage as this coverage can be very expensive.
D) Conditions Of Coverage
Regarding all mentioned coverages, please look into all conditions beforehand as they can be important, technical and demanding.
A positive aspect of corporate disability coverage is that there is by law no medical testing allowed if the employee directly participates.