The Employee Benefits Blog

Do Your Workers Understand the Value of Disability Insurance?

Posted by Michael Motyka on Tue, May, 08, 2012 @ 16:05 PM
Nearly half of new critical illness insurance claims in 2011 began prior to age 55, a significant increase in claims by younger policyholders compared with previous years, a new study by the American Association for Critical Illness Insurance and General Re Life found.

The percentage of claims that occurred before age 45 also grew comparedDisability Insurance with 2010.  Some 13 percent of male policyholders and 12 percent of female policyholders who received benefits were younger than 45, according to the data from 10 leading critical illness insurers.  

“The increase in younger claimants is likely due to an increase in younger buyers of this relatively new form of insurance coverage,” explains Jesse Slome, executive director of the American Association for Critical Illness Insurance.  “With higher health insurance deductibles and more restrictive plans, critical illness insurance is starting to gain traction among buyers in their 30s and 40s.”

Cancer remains the leading cause for new individual claims, accounting for 61 percent of new claims.  Heart attacks accounted for 11 percent, and stroke for 18 percent.

According to the American Cancer Society’s Cancer Facts & Figures 2012, one in three women and one in two men will be diagnosed with cancer at some point in their lives. The American Heart Association’s Heart Disease & Stroke Statistics 2012 shows that one in six U.S. deaths in 2008 was caused by coronary heart disease.

And yet, when it comes to anticipating a serious illness or accident, many people remain overly optimistic. More than 60 percent of those surveyed in the 2012 Aflac WorkForces Report said they think it’s not very or not at all likely they or a family member will be diagnosed with a serious illness like cancer, and more than half said they were not very or not at all likely to be diagnosed with a chronic illness, such as heart disease or diabetes.

Benefits administrators can help help bridge this gap in understanding by improving their benefits communications and correcting misunderstanding about this valuable voluntary benefit.

"There is a broad lack of understanding about the benefits of disability insurance, and as a result, far too many people are failing to put measures in place to protect themselves from time away from work," said Rob Grubka, president of Group Protection at Lincoln Financial Group, which rounded up a list of common myths about disability insurance in recognition of Disability Insurance Awareness Month.

Some common misperceptions regarding disability insurance include, according to Lincoln Financial:
  • Myth:  Disability insurance is primarily used for protection against accidents. Reality:  Disability insurance may prevent against any condition that takes someone out of work. While this certainly includes accidents, it can also cover planned absences, such as a surgery or pregnancy.
  • Myth:  Younger people don’t  need to worry about disability insurance. Reality:  See the results of the American Association for Critical Illness Insurance study above. And the Census Bureau reports that 11.4 percent of Americans ages 25-44 are affected with a disability.
  • Myth:  Very few people are affected by a disability. Reality: The Social Security Administration estimates that three out of 10 Americans entering the workforce today will become disabled before they retire. The Census Bureau estimates that more than 50 million Americans report having some level of disability.

How are you communicating with your staff members about the importance of disability insurance?

Winston Benefits is a HR solutions company that helps businesses automate and streamline their employee benefit programs. Custom designed and developed client specific solutions help enrich their total compensation and rewards programs while optimizing processes such as benefit communications, enrollment and administration.

Topics: accident insurance, voluntary benefits, critical illness insurance, long term disability insurance, voluntary insurance, critical illness benefits, disability insurance, AFLAC