Employers looking for a new employee recruitment and retention tool should consider offering voluntary supplemental disability insurance. Many workers are living paycheck to paycheck, meaning an illness or injury that stops them from working could be financially devastating. Group disability products don’t always provide sufficient coverage, but a supplementary policy can provide extra protection and peace of mind – at no cost to the employer.
The Disability Insurance Coverage Gap
The BLS says 22% of small businesses and 63% of large businesses offer long-term disability insurance. That’s a great start, but it still leaves many workers without the paycheck protection they may need in the event of a serious illness or injury.
If you’re facing lost income due to an illness or injury, some disability insurance is always better than none. Even though group long-term disability benefits help alleviate some of the strain of income loss, they don’t always provide enough coverage to avert financial disaster.
Policies vary, but here’s why group benefits may not be enough:
- Modest benefits. Group long-term disability insurance often replaces about 60% of a person’s pre-disability income. Ask yourself: would you be fine with a 40% pay cut? Many people wouldn’t be able to cover all their basic costs, much less maintain their lifestyle. When you add in the likelihood of unexpected medical bills, such a financial situation may become untenable fast.
- Short benefit periods. Group long-term disability insurance provides longer benefit periods than short-term policies, but the benefit periods may still be limited. Some only offer coverage for two years. If the disability lasts longer than that, the individual may not have any way to make ends meet. There may also be a long elimination period before the benefit period starts.
How Supplemental Disability Insurance Fills the Gap
Becky is a 35-year-old woman who works as a receptionist at a law firm. She has two children, and her family depends on her income. Then, she has a stroke. Her recovery will be long and difficult, and she won’t be able to work for a long time.
Thankfully, she has sufficient disability insurance.
Her group long-term disability insurance policy provides some coverage. However, it only replaces 60% of her income and only for two years, which is not enough. Luckily, she also has a supplemental disability insurance that increases her benefits to 85% of her pre-disability income, with a benefit period that lasts until she turns 66. With this coverage in place, she doesn’t have to worry about finances and can focus on her health.
The Many Reasons to Offer Supplemental Disability Insurance as a Voluntary Benefit
When employers offer supplemental disability insurance as a voluntary benefit, both the employer and the employees win.
- Employees have access to portable coverage that may replace up to 85% of pre-disability income with benefit periods that typically last to age 66 or 67.
- Guaranteed issue coverage is available without medical underwriting, meaning even employees with pre-existing health conditions can secure disability insurance.
- Employees obtain coverage at competitive group rates, making this more affordable than buying individual supplemental disability insurance.
- Coverage costs the employer nothing, meaning this a great way to round out employee benefits without straining the budget.
How Insurance Agents Can Seize This Opportunity
If you’re looking for a new disability insurance market, consider voluntary supplemental disability insurance. This insurance solution addresses three pressing problems:
- Employers are dealing with skilled labor shortages. Finding and retaining good employees isn’t easy. Better compensation may help, but employers also need to protect their bottom lines.
- Workers need to secure financial stability. Recent inflation has stretched budgets to the breaking point. Many workers are also worried about layoffs, which makes portable coverage particularly attractive.
- Everyone is at risk of a disability. The Social Security Administration says one in four workers will suffer a disability before reaching retirement age. In particular, cancer rates are on the rise among young adults.
If you want to help people deal with these problems while earning some commissions for yourself, this is an opportunity you need to pursue.
- Identify good candidates. Coverage is available for employees of all levels, whether they’re professionals, managers, receptionists, or warehouse workers.
- Make the pitch. Show your prospects why this is a great benefit to offer and educate workers on the importance of coverage to encourage high participation rates.
- Let DIS help. We provide resources and quotes to make things as easy as possible for you. We also have a co-selling program.
Are you interested in selling supplemental disability insurance? Get started.