As the economy improves, brokers and employers are doing more to expand benefit offerings to workers who are now less concerned about job security and more concerned about job benefits. One type of benefit that has seen recent growth is disability insurance, which experts say provides a valuable protection for workers at a relatively low cost. ≥≥
“There's been a resurgence in disability insurance sales,” says Kathy Plummer, director of product and market development with the disability and life insurance company Unum. “It was very slow before the recession. But I think we're going to see increases in coverage.”
Industry experts say in recent years, a couple of factors have worked to dull interest in benefits such as disability insurance. For one, the recession had many companies focused on cost cutting. Benefits outside medical insurance were often placed at a lower priority. As the recession faded, employers were then hit with the implementation of the Affordable Care Act (ACA). Understanding those changes and complying with new regulations have been a top focus of employers and HR departments.
But now the environment is changing again. The ACA is more established and better understood. Demand for skilled workers has driven companies to provide a wider selection of benefits in order to attract and retain workers. Under these new circumstances, disability insurance is getting a second look by many brokers and employers.
Income protection
Disability insurance offers a very basic protection: Workers can ensure that they continue to have income even if they are unable to work due to injury.
“Your income and ability to work are your most valuable assets, no matter what career phase you are in,” says Larry Schneider, founder of the Disability Insurance Resource Center, who has worked as a broker in the field since 1972. “Protecting your income is the cornerstone to all financial planning.”
Unlike disability insurance offered by the government through Social Security—which has approximately a 70 percent initial rejection rate—many employer-based disability benefit programs offer a guaranteed benefit to workers who purchase the insurance, with either their own dollars or with the help of their employer.
Common Misconceptions
There are certain misconceptions about the need for disability insurance. For one, the chances of a worker needing it are far greater than many think: About 1 in 4 workers will become disabled for some period of time before they reach the age of 67, according to government figures.
Many employees assume workers' compensation plans will cover them if they become injured, but they may forget that only a small fraction of injuries occur on the job. Workers' comp does not provide protection for injuries outside of work. And stereotypes about disabling injuries happening mostly to male workers and older workers have also proven to be inaccurate.
Although not all employees are well-educated on the benefit, many are interested in it. In the latest Metlife Employee Benefits Trends Study, just over 40 percent of workers said that disability insurance is a “must have” benefit. That put disability insurance in the top 10 most important benefits, of the 17 that the study tracked.
A growing range of options
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