FAQs About Insurance
Why is disability insurance for my employees so important?
Survey results show that most employees do not understand the value of protecting their income and livelihood in the event of a disability.
Past statistics have shown that one-third of workers over age 30 will become disabled for at least three months during their working years.¹ Despite these figures, most working Americans miscalculate the enormity of this risk, according to a survey of 800 working adults by America's Health Insurance Plans. Almost half of employees (47%) say they're not concerned that a disability will put them out of work for three months or more, while 25% are somewhat concerned and only 27% are very concerned. "It won't happen to me," or "The statistics don't really affect me," are common arguments we've all heard before.
The majority (58%) of respondents believe they're covered by disability insurance through their jobs, but in reality only 35% of workers have group disability insurance. What's more, most employees overestimate the potential of workers' compensation insurance to cover them if they become disabled. While only 10% of disabilities are covered by workers' comp, 59% of survey respondents believe the proportion is much higher. These findings are all the more alarming considering how ill suited many Americans are to support themselves if they're forced out of work by disability. The largest proportion of respondents (35%) say they could live for just three months or less on their savings and other income if the family's primary wage earner lost his or her income due to disability. Thirty-two percent say they could live for four to 12 months, while 24% could live 13 months or more.
Workers also misunderstand the causes of disability, too, often associating it with accidents. Fifty-eight percent think accidents are more likely to cause a disability, while 29% believe they're likely to become disabled due to an illness. But in reality, illnesses, such as cardiovascular disease and musculoskeletal system disorders, cause more than three-fourths of short-term disabilities and more than four-fifths of long-term disabilities.
Fortunately for employers, disability is one of the most affordable employee benefits, with short-term disability group insurance averaging $174 per year per employee and long-term averaging $206. In contrast, the average annual cost of medical insurance for a family is $9,068.
What can employers do to educate employees on the importance of this protection?
If you already offer disability coverage, make sure to communicate the value of this coverage to workers. Workers are adamantly familiar with their medical insurance plans because they use these benefits often, but they may not be as familiar with disability insurance because of infrequent usage. As your agent, we can help educate your employees on this valuable benefit.
For employers that do not currently offer disability insurance as a benefit, you might consider a voluntary disability program for your workers. Many insurance companies will offer premium discounts and underwriting concessions to employees in return for sponsorship of their plans by the employer.
¹ 1985 Commissioners' Individual Disability A Table, Society of Actuaries.
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