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The Case for Disability Insurance; 5 Easy Steps

Disability insurance can round out an employer’s health care offerings and provide valuable income protection for individuals in case they become sick or injured and are unable to work.

For many working Americans, losing income as a result of a disability is not something they think will ever happen to them. However, according to the U.S. Social Security Administration, 1 in 4 of today’s 20-year-olds will become disabled during their working years.

55 percent of employees found the financial impact of their disability incident to be major or devastating. This reality, coupled with a growing need to offer financial protection products in the workplace, can be compelling reasons for HR Managers and benefits consultants to encourage the inclusion of disability insurance in a company’s employee benefits package.

Further compounding this is today’s candidate-driven job market, which is putting pressure on companies to rise above the competition to attract and retain talent. Benefits can serve as a key differentiator, particularly for employees favoring an employee benefits package that goes beyond the traditional. Disability insurance can round out an employer’s health care offerings and provide valuable income protection for individuals in case they become sick or injured and are unable to work. This is important, because LIMRA research reveals that 75 percent of employees say they would have trouble paying living expenses after several months if they were disabled or unable to work.

The following are some fundamental reasons on why employers should offer disability insurance.

1. Help increase employees’ financial security. Money can be a source of stress for many working families. With high-deductible health plans (HDHPs) increasing out-of-pocket costs for workers, employees tend to rely more and more on their workplace benefits for financial security.

2. Offer customized solutions to increase participation. Regardless of company size or complexity, it’s important to customize a disability insurance program that addresses your employees needs. Educating about the benefits of program features, such as online enrollment, seamless payroll deduction and no medical exam requirement to enroll, make this benefit offering efficient and attractive to employees.

3. Integrate absence management. One critical component of an effective disability management program can be the integration of absence management capabilities. As more states pass paid leave laws, more companies need help navigating the complexities of absence management. Managing absences is a demanding job for even the most sophisticated HR teams. Employers should look for integrated plans that includes both disability and absence management.

4. Boost employer and employee satisfaction. Research validates that utilizing disability insurance can sway employee perceptions of employers and enhance overall employee satisfaction (71 percent versus 54 percent). Employees with disability insurance—especially if they had it at the time of their incident—are more satisfied with their employee benefits and much more likely to feel that their company cares about them.

5. Educate with effective benefits communications. While the benefits of disability insurance may be obvious, research continues to show that very few employees even understand the basics of disability insurance. For example, many employees don’t understand that it is insurance to replace lost income when they are out of work, or they are under the impression that the product is more relevant for employees with “high risk” jobs, like construction. This is not true; it is important to communicate effectively that any individual can experience an income-disrupting injury or illness.

Also important to clarify is the notion that disability insurance is not affordable. Instead, show how it can be of tremendous value for working Americans living paycheck to paycheck. Benefits communications that break down the basics of the product, uses real life examples, and avoids industry jargon can go a long way. Think about this as you prepare for enrollment season later this year.

As for employees, in addition to their health and home, there is nothing more important than their ability to help protect their income. Employers considering financial protection products have a good reason to start with disability insurance. Contact our team at RCB & Associates today and let us help you create the best plan for your employer group, 616-233-9050.

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