NU Online News Service, Nov. 7, 8:57 a.m. – Disability insurance and what it covers remain a mystery to many full-time employees, according to a recent national survey by MetLife Inc., New York.
The product replaces a portion of an employee’s income if he or she is unable to work because of injury or illness.
More than half of full-time employees have done no specific planning for their financial security and protection in the event of a disability, according to the survey.
Of employees who have disability insurance coverage, only 52% overall believe that their coverage provides adequate protection. This percentage is even lower for women, according to the survey.
Twenty-seven percent of women between 21 and 39 who are full-time employees do not think that maternity is covered while 45% are not sure.
“The findings of this survey are a strong wake-up call for the need to increase disability benefits education for employees,” says Maria Morris, vice president of MetLife’s group disability operations.
Although women account for almost two-thirds of group short-term disability insurance claim volume, only 43% of women feel that their disability coverage provides adequate protection.
More than one-third of women admit they simply don’t know how to determine adequate coverage amounts.
Advisors who sell group coverage can help employers evaluate the current level of knowledge their employees have, Morris says.
They can do this in part by using calculators that insurance providers offer on the Internet. An employee’s budget is entered into the calculator, which then determines whether the employee has a need for disability insurance and if so, how much coverage is needed for the employee to continue her current lifestyle.
Questions to ask when selling group coverage to an employer include whether the employer thinks the employee knows what the product is, whether the employee has a clear definition of disability, and whether the employee knows how the expense of a potential disability could affect their budget, Morris says.
“Many people couldn’t figure out whether it was worth it,” she says.
“Do they consider that there are many life events that could take them out of work? Pregnancy and their complications are the main reasons women between 25 and 45 are out of work, and women are 50% more likely to have a disability claim than males in that same age group.”
Other ailments that keep women on disability include gynecological problems besides pregnancy and its complications, problems with one’s gall bladder and breast cancer, Morris says.
“Only 11% of employees surveyed had formal discussions with their financial planner on disability,” she says. “It’s a real opportunity for financial planners.”
“Because seven out of 10 people between the ages of 35 and 65 will find themselves disabled during some point in their careers for at least three months, it is important that employees have a greater awareness of the role disability insurance can play in their financial and protection planning.”
MetLife’s 2002 Financial Freedom Study, a national employee survey conducted in August, consisted of 1,038 online surveys for actively employed full-time employees, 21 or older, who work at companies that have a minimum of 50 employees.