May 23 2011
According to Metlife’s 9th Annual Study of Employee Benefits Trends (EBTS), more than half (56%) of respondents are very concerned about their financial security in the event that they are unable to work, yet two-thirds of them are unaware of how much coverage they should purchase. There seems to be great opportunity to educate employees about the value of disability coverage that is available to protect their income.
Common Myth #1 - If I'm young and healthy, I don't need disability insurance!
One common misconception is that the driver of disability is accidents, so many employees dismiss the need for coverage. According to the Council for Disability Awareness’ 2010 Long Term Disability Claims Review, illnesses are actually the main culprit. Even those who are young and healthy need to protect their income. In fact, cancer, back injuries, fractures, depression and pregnancy are common causes of long-term disability among people ages 21 - 30, according to MetLife's study.
Common Myth #2 - I'm sure I have enough coverage!
Those covered by disability insurance sometimes don't have adequate coverage. Most of the respondents to MetLife's study have their disability coverage through work, but it may not always be enough coverage to protect 60% - 80% of their income, including bonuses. It is critical that employees have enough income protection to cover their essential living expenses, such as housing and utilities, transportation, food, education expenses and health care. Offering supplemental disability insurance on a voluntary basis is a cost-effective way for employers to help employees personalize their financial protection plan.
Nov 03 2011
As an employer, how much is your company paying attention to the details when it comes to disability insurance. Disability insurance can sometimes be an afterthought to both employers and employees, until you need it. But by the time you need it, it may be too late to learn that you (or your broker) should have taken a look at the details.
When we review disability plans for our clients, we often notice gaps in coverage. In one instance, we reviewed a client's plan and found a restriction that could have resulted in someone not receiving a benefit, even if they were to lose significant income. A slight adjustment to their contract was all it took to ensure that all of the client's employees were set up to receive the protection they needed. But if this detail had gone overlooked, the results could have been disastrous.
Disability insurance contracts can be deceiving; because while they may look similar, they can actually vary drastically. There is not a one-size-fits-all solution. As another example, a detail that should be given a closer look is an individual plan's limitations. Many disability plans don't consider somebody to be disabled if they are able to work 40 hours a week, and yet many executives would suffer significant income loss if they were limited to 40 hours. Likewise, some policies qualify disability as both loss of occupation AND loss of earnings; while other policies qualify disability as loss of occupation OR loss of earnings. The simple difference between the word “and" and the word “or" is a detail that can make a big difference and determines whether the individual qualifies for income replacement or not!
A third and final detail that we'll point out in this blog post regards bonuses; which can sometimes account for a large portion of an employee's income. As an employer, you'll want to pay special attention to whether or not your employees can be properly compensated from disability insurance, once bonuses are factored in. If they cannot be properly compensated, we offer solutions that work in conjunction with their group LTD. These supplemental solutions work well because the cost is low; especially relative to the potential payout.
With a clear need for employers to pay attention to the details when it comes to disability insurance, the question becomes; who's paying attention for your company?
disability insurance, health plan restrictions, supplemental solutions