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Kara Hoogensen (Credit: Principal)

Life Health > Health Insurance

Principal's Kara Hoogensen Wants You to Protect Paychecks

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What You Need to Know

  • Disability Insurance Awareness Month 2022 is coming in May.
  • One-fifth of small and midsize employers say they want to add or expand group disability benefits over the next 12 months..
  • Kara Hoogensen believes many small employers need help with understanding disability plan options.

Principal Financial Group is out trying to get more attention for an often-forgotten form of protection insurance: group disability insurance.

Life insurers have reported seeing the COVID-19 pandemic increase consumer interest in life insurance.

Principal is hoping to generate a similar level of interest in “paycheck protection” insurance, and especially in short-term disability insurance.

The Paycheck Protection Market

Short-term disability plans typically pay benefits when an insured worker suffers an illness or injury that keeps the worker off the job for a period of a few weeks to six months.

In the employer market, short-disability disability insurance costs an average of about $20 per employee per month for employer-paid group coverage, according to Principal data.

Employers can also offer voluntary, employee-paid disability plans.

Healthy people with stable employment can buy individual disability insurance policies. Breeze, for example, has started selling individual disability insurance through the web.

The Council for Disability Awareness and Life Happens, an outreach organization sponsored by the insurance industry, are preparing to run the 16th annual Disability Insurance Awareness Month outreach campaign in May.

The Insurer Executive´s Perspective

Kara Hoogensen, senior vice president for specialty benefits at Principal, oversees the Des Moines, Iowa-based life insurer’s group disability business.

Via email, we asked Hoogensen questions about how she sees the state of the group disability market.

1. How has the pandemic affected sales and marketing of small group short-term disability insurance plans?

The pandemic highlighted the importance of income protection benefits; sales are up with double-digit growth in 2021.

In fact, according to the latest Principal Financial Well-Being Index, one in five small- and medium-sized businesses (SMBs) plan to increase short or long-term disability insurance over the next 12 months.

2. How does the current level of activity compare with normal levels?

Quote activity continues to grow above prepandemic levels.

As the competition for labor continues to remain intense, we’re seeing an increased demand for benefits packages that include income protection solutions such as short-term disability leave.

3. What kinds of shifts in the number, size or type of short-term disability claims have you noticed since the pandemic started?

While the overall incidence for short-term disability did increase as a result of COVID-19, volumes have started to return to prepandemic levels after the latest wave of variants.

Additionally, there’s been a slight decrease in the length of short-term disability claims, largely because COVID-19 claims don’t last as long as other short-term disabilities.

4. What do you think about the rise of state and local paid family and medical leave mandates? Are those mandates affecting short-term disability carriers?

The interest in paid family and medical leave (PFML) programs is increasing as more states implement these programs and as this type of program was discussed at the federal level in 2021.

Principal currently serves the PFML markets in Massachusetts and Connecticut.

State PFML programs are limited in how long employees can be out or how much income replacement they can receive, often leaving gaps for many residents.

Once employers become familiar with how PFML works, they typically understand how important it is to also offer short-term disability solutions to close these gaps.

There is a growing need among employees for paid-leave programs, according to the latest Well-Being Index.

Additional caregiving responsibilities were a top reason why employees are leaving their current job(s).

Several states — with additional ones becoming active in the next few years — have taken steps to implement PFML programs that help address these responsibilities.

5. Reports have surfaced about employees with short-term disability failing to file claims when they have valid reasons to do so. What, if anything, should employers do about that?

Short-term disability leave can be misunderstood by employees who don’t always know when an accident or illness may qualify for these income protection benefits.

This can cause them not to use the benefit when it is available to them.

Businesses can help by educating employees about what benefits they can access, both when the benefit is first offered (or enhanced) by the employer as well as on an ongoing basis.

Providing specific examples of what qualifies for short-term disability leave can help demystify the benefit.

6. Can insurance agents and other financial professionals who work mainly with retail clients and self-employed people have any hope of breaking into the group disability market?

Many small businesses don’t have a benefits specialist and, in many cases, they have no dedicated human resources department.

Advisors can help by simplifying the way these products are talked about.

The best way to help small employers is to help them better understand how they can help their employees and the role benefits play in recruiting and retaining talent in this tight labor market.

There is a natural connection between talking about accumulating assets and protecting income in the event of an accident or illness. If a particular advisor is not comfortable discussing income protection, they likely know of someone who has this skill set.

In this situation, advisors often work collaboratively to address the different needs the small business — and its employees — have.

Kara Hoogensen (Photo: Principal)