Benefits group pans 401(k) loan disability mandate proposal

Should workers who take out 401(k) plan loans automatically get credit life and disability insurance?

Diann Howland, a vice president at the American Benefits Council, recently told a national benefits policy panel that the council thinks creating a plan loan credit insurance mandate would be a bad idea.

The council represents large employers and their benefit plan administrators.

Howland talked about the idea of a plan loan credit insurance mandate in written testimony submitted to the Advisory Council on Employee Welfare and Pension Benefit Plans, a body better known as the ERISA Advisory Council.

The advisory council helps the secretary of the U.S. Labor Department meet Employee Retirement Security Act requirements.

The council has been talking about ideas for managing disability risk in an environment of individual responsibility.

Some topics that have surfaced during in-person hearings and in written testimony include the increase the number of workers seeking benefits from the Social Security Disability Insurance program, the need to educate workers and employers about the need for income protection, and concerns about whether private disability insurers’ claim review procedures are too tough, too unpredictable, or just right.

Like other witnesses, Howland talked in her testimony about the need for help with promoting disability insurance awareness and efforts to help people who become disabled handle retirement income needs.