NU Online News Service, Feb. 11, 12:00 p.m. – Small employers greatly underestimate the risk that an employee between the ages 35 and 65 will suffer a serious disability, according to a recent study by the American Council of Life Insurers, Washington.
Nearly half of the respondents of Disability Income Insurance: Penetrating the Small-Employer Market believe the likelihood is one in 50 of becoming disabled. The actual likelihood is one in three, the ACLI says.
The survey examines why some small employers (5 to 100 workers) offer disability income insurance coverage to employees and why others decide against it.
“People don’t understand that they are much more likely to become disabled than to die during their working years,” Ellen Steel, ACLI disability committee chairman said today in a teleconference on the survey results.
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They don’t understand that disability insurance is “paycheck protection for individuals and families,” she said.
Terri Sorota, ACLI senior counsel, said 82% of respondents have no disability coverage.
“We were stunned by those results and the implications to families,” she said, pointing to the aging of the baby boomer population and the corresponding increase in likelihood that a disability will occur.
Most people who have long-term disability insurance get it through their employer, she said. Large employers are likely to offer it, but most Americans work for small employers and government statistics show that most small private firms do not offer disability income insurance, according to the ACLI.
“We found that small employers, much like the population at large, are woefully ill informed about the possibility of becoming disabled,” Sorota said.
Assuming that the costs are prohibitive is the main reason small employers do not look into disability coverage, ACLI research associate Khari Cook said. Underestimating the likelihood it will be needed is the second reason they choose not to investigate it.