This open enrollment season, as employees choose next year’s insurance benefits, it’s a good time to take notice of disability plans. Most workers consider health and retirement plans their most important benefits, but they should also be weighing the importance of disability insurance, especially younger workers who may not immediately see its value. Employers can take steps to highlight the benefits of such plans and educate their employees during open enrollment periods.
The following articles explain why disability insurance is important and what employers can do to review their offerings and promote them to employees.
Employers and Employees Should Closely Examine Disability Benefits
“ ‘Disability benefits aren’t on most employees’ radar,’ said Julie Stich, CEBS, associate vice president of content at the International Foundation of Employee Benefit Plans (IFEBP) in Brookfield, Wis. ‘Employees assume they will never have to use disability benefits, but the reality is that 1 in 4 20-year-olds will become disabled before reaching retirement age,’ she said, citing Social Security Administration data. A recent IFEBP report, Employee Benefits Survey 2016, found that disability benefits remain a consistent part of employers’ benefits packages, whether employees are aware of it or not. While educating employees about the value of coverage that provides continuing income in the event of a disability is important, employers also can use open enrollment as an opportunity to review their disability benefits and to compare them to what other employers are offering.” —SHRM
Young People Must Understand the Importance of Disability Insurance
“Rick Hu, 31, a financial advisor at Northwestern Mutual, says that he often meets with clients in their 20s or 30s who are saving for their future but aren’t well protected. An illness, an accident or a death could easily leave them without the ability to earn the income they are using to save for their family’s future and pay their bills today. … ‘For Millennials, our income is our largest asset,’ Hu added. ‘If you can expect to earn at least $50,000 per year for the next 40 years, that’s $2 million worth of income that you should be protecting.’ That’s why it’s so critical for young people to be properly protected. Typically an employer-sponsored disability income plan isn’t enough, as it generally replaces only a fraction of your income if you become disabled. … Without supplementary coverage, it often means that those employees are underinsured.” —Forbes
Disability Insurance Covers a Broad Range of Possibilities
“Some voluntary plans, such as cancer insurance, critical illness insurance and accident insurance, provide benefits only in certain circumstances. However, other voluntary coverage options, such as hospital plans, disability insurance or medical bridge plans, offer assistance in a broader range of situations. … Those with a high-deductible plan and a high-risk job or hobby may find supplemental coverage is a low-cost investment for their peace of mind.” —U.S. News & World Report
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