Worksite Marketing

Bringing New Light to Choosing and Using Disability Coverage
by Rick Shube

With economic turmoil taking a toll on finances, how well do people understand their financial risks and insurance coverage? When it comes to disability insurance plans, not so well, according to a recent national survey conducted for CIGNA by research firm, Yankelovich. Your employer clients may not realize that their workers consider them a primary source of advice on the topic. As a source of advice, more people identify their employer (43%) than a financial professional (36%), their spouse (33%), or the Internet (19%).

While nearly all people say they would find disability insurance valuable, there is a significant knowledge gap in terms of how aware workers are of their need for coverage and the cost of insurance through their employer. That’s despite the fact that disability takes a big toll and presents substantial financial risks in America. Three out of 10 workers, entering the work force today, will become disabled before retiring. An illness or accident will keep one in five workers out of work for at least a year before the age of 65.

Employees may need support in these key areas:

• Employees are in the dark about the costs. Nearly 40% overestimated the cost of a basic long-term disability policy available through work. Estimates were more than double to quadruple the actual average cost of a plan to insure 50% of their covered earnings against disability. Only about three in 10 correctly identified the average cost range (about $20 to $25 per month) for this type of coverage. It is often less expensive than getting similar private disability insurance outside the workplace (a range of about $52 to $160 per month).
• Sixty-two percent have disability coverage and 48% of them have it through an employer. About 31% of employees in private industry have access to long-term disability insurance through their employer. Some might think they have coverage, but don’t.
• Single people are much more likely than are other groups to report not having disability coverage, with 45% saying they don’t have it.

How You Can Help

There are real opportunities for you and your clients to help employees understand disability insurance, strengthen their financial security, and build loyalty and trust. Brokers are allies with employers that want to help employees choose and use disability coverage. One way to start is to encourage employers to offer several types of plans. Long-term, short-term, and mid-term disability policies offer varying levels of coverage for different lengths of time. Buy-up options to supplement base coverage can help employees get additional coverage. Voluntary coverage lets employees purchase insurance on their own at affordable group rates. With a variety of options, employees can choose the level of protection that meets their needs, life stage, and budget.

Another way is to add perks to the plan. Look for disability plans that offer low-cost or no-cost perks and value-added coverage. Plans should be relevant to different segments of the employee population and create additional enrollment incentives. For example, some plans offer access to valuable discounts for gym and weight management programs that younger workers may find attractive. Work/life support services can be attractive to older workers or busy families with children.
Employees can make poor decisions when they don’t understand specific plans including foregoing disability coverage. As the preferred source of advice, it’s critical for employers to work with their broker and carrier to prepare a sustained communications strategy to give employees the tools they need to make smart decisions. How? Encourage your clients to do the following:
• Host employee education sessions or enrollment meetings -- A company’s disability carrier can often staff the meeting and provide educational materials that explain how disability insurance works, what it costs, and how to select a plan that best fits employees’ needs.
• Share the policy -- Help employees understand provisions, waiting periods, exclusions, and coverage durations. Bulletin boards or a company intranet site are great vehicles for sharing this information and making it available whenever people need it.
• Be clear about costs -- Make sure communications clearly show what portion the employer is paying and what portion employees are expected to pay. Provide links to income-needs calculators to help employees budget costs and compare options before they decide.
• Target communications to specific needs -- Work with the disability carrier to tailor plan communications to segments of the employee population, such as young singles, Baby Boomers, and families. When messages are more relevant, employees are more likely to hear the message and use the information to make informed decisions.
• Use a variety of communication channels – Using face-to-face meetings, intranet sites, e-mails, text messaging, posters, and payroll stuffers provide easy access to the information employees need to maximize their available coverage.
• Make information easy to access year-round. Share information on intranet sites; include articles in newsletters so information stays at the top of employees’ minds throughout the year, not just during enrollment time.
• Institute benefit tune ups. Encourage employees to do annual tune ups on their insurance coverages, during enrollment time, to make sure they take into account any changes that have occurred over the past year or will occur in the coming year that could affect their needs and adjust their selections accordingly, such as promotion, recent divorce, getting married, new baby etc.

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Rick Shube is VP of Sales for CIGNA Group Insurance – Western Region. He’s been in the employee benefits field for 30 years with experience in both the broker and carrier segments of the industry. Rick can be reached at Richard.shube@cigna.com.