Illuminate The Risk

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A typical working-age American is significantly more likely to become disabled than was the case 10 years ago. Even so, many employees dont put a high value on their employer-provided disability benefit.

When asked, most employees underestimate their chances of becoming disabled during the course of their career. That may help explain why employees tend to place less value on disability benefits.

Perhaps even more disturbing is the fact that a substantial number of workers are not even aware they are covered under an employer-sponsored group plan. It is, in effect, an “invisible” benefit.

According to joint research on insurance ownership by LIMRA International, Windsor, Conn., and consumer research group Integras, only 17% of the working population report being covered by a group disability benefit. The research drew from a panel of 300,000 U.S. households.

In reality, says the U.S. Department of Labor, 37% of workers participate in a short-term disability (STD) plan and 28% are covered under a long-term disability (LTD) plan.

That leaves plenty of growth potential. But producers who want to increase their group disability business should recognize that success will require a high level of involvement in the employee communication and education process.

This is particularly true when the products involve voluntary or buy-up disability benefits, which offer their own unique communication and educational challenges. While these products offer employees convenience and flexibility, they are just as likely to result in confusion and misunderstanding.

Employees need to have a greater appreciation of the economic importance of disability insurance in order to value the benefit and consider buying in or buying up. When employees are involved in the selection process as early as possible, it is more likely they will understand the benefits intrinsic value. Producers can play a key role in directing this value-creation process.

Whether at the point of sale or at renewal, producers should actively participate in the employer-employee communication process. This will help ensure that the plan enrollment campaign is properly designed and is effective in helping workers with diverse needs understand the value of the disability plan. Clear information and presentations using simple language, bulleted lists and colorful slides are appealing and effective.

Tailored enrollment campaigns aimed at various employee segments stratified by age, gender, personal situation, ethnic background and geographical location also work well, especially when coupled with live benefit discussion sessions. Most employees appreciate a producers active involvement in such discussions and value the advice, as long as the producer is perceived primarily as a consultant, not just a “seller.”

Employees are more likely to trust a producer who is able to demonstrate expertise in the product as well as thorough knowledge of competing insurance products. Employees also are looking for someone who can explain plan differences clearly using examples pertaining to various personal circumstances.

Proper communication between broker and employer is also vital, given the complexity of the average employer-sponsored disability product. Although group insurance carriers are usually willing to do their best to tailor their products and services to employer needs, many employers have a difficult time comprehending the array of choices available to them.

Voluntary disability contracts can be even less standardized, providing greater opportunity for both customization and confusion. Even the shrewdest human resource (HR) personnel are not always able to keep up with the constantly evolving disability products, features and services offered by todays providers.

Companies with less than 200 employees (and limited HR resources)i.e., the bulk of the American economy and group insurance marketplaceare at an even greater informational disadvantage. Given time constraints on the benefits staff, most firms rely solely on their broker for help in understanding the disability product.

Since employees often are frustrated with not being able to obtain quick and simple answers to benefit questions from HR, producers might find it beneficial to be more involved in the “post-presentation” interpretation of material. For instance, they could suggest ways the employer can enhance communications with employees, such as creating a comprehensive index section for all plan reference materials, and a “frequently asked questions” section.

At the time when employers and employees alike are competing for benefit dollars, brokers efforts to establish greater rapport with clients through consultative sales will bring resultsin the form of higher enrollment and retention rates, expanded cross-sale opportunities, and, ultimately, greater earnings and profitability.

is an analyst in LIMRAs employee benefits product research area. She can be reached by e-mail at ksapronova@limra.com.


Reproduced from National Underwriter Edition, March 4, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.