Disability A Valuable Employee Benefit

Most large employers understand the value of providing disability insurance as a benefit option to their employees, whereas many small to medium employers, as well as their employees, have a low awareness of the need for disability insurance. If you are interested in attracting and retaining the highest quality employees for your organization, these are some of the reasons you should be offering disability insurance as part of your total benefit package.

Why disability insurance? Generally for most employees, their income is vital to their quality of life. Yet many employees put it at risk every day because they lack the disability insurance coverage necessary to protect it.

In fact, a 2007 CareerBuilder.com survey found that 4 out of 10 U.S. employees “always” or “often” live paycheck to paycheck. The Council for Disability Awareness, Portland, Maine, has amassed a collection of similarly disturbing statistics, including the fact that, in a typical year, disability causes about half of U.S. mortgage foreclosures.

Here are a few things that you should consider when evaluating the need for disability insurance:

• How do your employees plan to make their mortgage payments or pay for critical necessities such as electricity, fuel, food and health care if they become disabled and do not have disability insurance?
• Do they understand the importance of protecting their income streams?
• Do they understand the gaps in state disability insurance, workers’ compensation and Social Security coverage? Note that the largest gap affects non-occupational short-term disabilities.

For these reasons, voluntary disability insurance (employee-funded, no cost to employer) is a popular worksite benefit. In fact, a well-executed enrollment of employees with no prior disability coverage can easily achieve 30% to 50% participation. In order to make disability insurance a valued benefit, persuading employees to participate is not easy, requires a thoughtful strategy, a supportive employer, and proper communication.

For voluntary disability insurance to be a valued employee benefit, the small to medium employer must offer it like the larger employers. A successful enrollment requires a captive audience. Participation levels are directly linked to quality products, access to employees, and the expertise of the enrollment team.

The efficient way to reach employees is through a mandatory, employer-sponsored group meeting followed by one-on-one meetings to address individual needs. If a disability benefit is presented as a serious and valuable one, employees will treat it as such.

Left uneducated, employees will not understand the value of disability insurance and will likely be unwilling to opt for it. But if you are looking for a way to increase your benefit package without increasing your cost, voluntary disability insurance can be an important part of your program.

Ray Ward is a principal at Legacy Benefits & Insurance Services. He specializes in helping small to medium sized businesses create comprehensive and cost efficient benefit packages. You can contact Ray at RayWard@YourLegacyBenefits.com or by calling 916-677-2130 ext.101.