Employee demands for disability coverage going unheard

A recent study suggests there’s an unmet demand for this benefit, and that producers can profit by filling the gap.



New research suggests that employees are so keen to obtain disability insurance through their employers that they are willing to fund some or all of the premiums themselves.

A recent study from the Consumer Federation of America (CFA) has revealed that, while only one in three private sector employees offer long-term disability coverage, one in four Americans will need disability insurance sometime during their working lives.

The CFA believes common Social Security disability insurance won’t adequately address this hardship, paying out just $1,100 a month for eligible disabilities. Employees agree. Nine out of 10 employees told the CFA they wanted their workplace to offer more generous coverage through long-term disability insurance. More than half said they would pay for the entire cost of coverage themselves.

 “In a nutshell, employees are telling us that they want access to disability coverage at work, they’ll pay for it, and they’ll feel better about their employers as a result,” said Mary Clarke Guenther, a spokesperson for disability insurance carrier Unum, which helped fund the CFA study. “That should be a powerful sales motivator for a broker.”

However, most employers say they don’t know much about disability insurance. This is particularly true of employers with a small staff size. According to the CFA study, 62% of organizations with fewer than 100 workers say they don’t know much or anything at all about disability insurance.  

Guenther said producers can help by educating their clients on disability insurance and finding cost-effective solutions by shopping for policies from different carriers.

“Disability benefits are available now with a wide range of funding options for businesses…to voluntary options that won’t cost an employer a dime,” she said. “At a time when benefits dollars are so stretched, group voluntary with auto-enrollment or individual voluntary coverage may be something to consider so that employees can get the coverage they want and need.”

Producers can even discuss blended-funding arrangements with small businesses wary of increasing costs. The CFA revealed that 86% of employees said they would be willing to pay half the average per-month premium of $30 if it meant they had access to quality disability insurance.

The reward for offering disability coverage? Nearly 60% of employees said having disability benefits would make them feel more favorably toward their employer.  That could be a powerful message from a producer to a client.

 “Expanding the availability of disability insurance is a win-win goal,” Guenther said. “Disability benefits can [help] clients and their employees prepare for the financial consequences of illness and injury.”

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