Unum report says two-thirds of working Americans lack access to this
important financial safety net
WASHINGTON--(BUSINESS WIRE)--
Group disability insurance protects as many as 500,000 families a year
from impoverishment, according to an economic analysis by Charles River
Associates released today at a symposium hosted by the Financial
Services Roundtable, the American Savings Education Council and the
Aspen Institute.
Commissioned by employee benefits leader Unum (NYSE: UNM), the analysis
estimates that private group disability coverage translates into direct
savings of up to $4.5 billion a year to the government and taxpayers.
“This groundbreaking report quantifies the immense economic value
financial protection products such as disability, life and long term
care insurance provide American workers,” said David F. Babbel, emeritus
professor at The Wharton School and leader of the Insurance Economics
Practice at Charles River Associates. “These benefits provide a
financial safety net in the event of misfortune, helping the government
avoid billions of dollars in public assistance payments as a direct
consequence of the insurance.”
Financial
Security for Working Americans: An Economic Analysis of Insurance
Products in Workplace Benefits Programs examines many facets of
these benefits, from individual need to business value to social
benefits.
Its conclusions are clear: most consumers lack basic financial
protection; the workplace is the most effective avenue for access to
affordable coverage; and these benefits provide undeniable and concrete
value to the government as well as the individuals they help protect.
“Employer-sponsored financial protection benefits provide a critical
financial safety net for individuals and families, particularly lower-
and middle-income Americans,” said Unum CEO and President Tom Watjen.
“While many employers do offer private disability insurance to their
employees, a full two-thirds of working Americans don’t have access to
this type of safety net.
“We hope that this report contributes to a meaningful conversation among
consumers, employers, insurers and policymakers as we move forward
together to provide important financial protection to working Americans.”
The symposium, PROTECT 2011: Workplace Benefits and Financial Security,
was held at the Newseum. It outlined the importance of insuring against
risk and protecting financial assets in an age of scarce government
resources and difficult economic times. Participants included Senators
Kay Hagan (D-NC) and Bob Corker (R-TN), representatives from the host
organizations and the CFA Institute, Certified Financial Planner Board
of Standards, American Institute of CPAs and benefits industry
professionals.
Highlights from Financial Security for Working Americans
The need for financial protection:
-
About 1 in 3 workers will be disabled for at least 6 months during his
or her earning years, with the median length of disability being 2½
years.
-
Most Americans do not have the financial resources to pay their bills
if they become unable to work. More than 70 percent of American
households could not pay their normal living expenses if a wage earner
is disabled for six months.
The value of employer-sponsored benefits:
-
Employers today spend $10 billion in premium each year to provide
disability insurance to 40 million workers. Collectively, this
insurance generates $590 billion in economic welfare for employees.
-
The $21 billion employers currently spend on group life insurance
generates up to $3.5 trillion in economic welfare for 75 million
covered employees.
An affordable resource:
-
Group disability premiums can be as little as $25 per month or $300
per year, and group term life insurance premiums for someone just
starting a career can be less than $1 per year per $1,000 of death
benefit.
-
An employee in his twenties earning $40,000 to $50,000 per year
suffering a disability can obtain well over $1 million in payments
from an employer-sponsored disability plan.
The gaps in financial safety nets:
-
In 2009, only 60 percent of civilian wage earners were covered by
group life insurance, and only 32 percent were covered by group
long-term disability insurance.
-
The total economic welfare value of these insurance products could be
substantially higher if more employers made the insurance available to
their workers.
The public-private partnership:
-
Employer-sponsored disability insurance promptly provides a crucial,
uninterrupted income stream for the months or years it typically takes
the Social Security Administration to determine whether an individual
qualifies for government benefits.
-
Wage earners with disability coverage are much less likely to fall
into poverty if they become disabled, and therefore are less likely to
require public financial assistance.
About Unum
Unum (www.unum.com)
is one of the leading providers of employee benefits products and
services in the United States and the United Kingdom. Through its
subsidiaries, Unum Group paid approximately $6 billion in total benefits
to customers in 2010.
About Charles River Associates
Charles River Associates(R) is a global consulting firm specializing in litigation,
regulatory, and financial consulting, and management consulting. CRA
advises clients on economic and financial matters pertaining to
litigation and regulatory proceedings, and guides corporations through
critical business strategy and performance-related issues. Since 1965,
clients have engaged CRA for its unique combination of functional
expertise and industry knowledge, and for its objective solutions to
complex problems. Headquartered in Boston, CRA has offices throughout
North America, Europe, the Middle East, and Asia. Detailed information
about Charles River Associates, a registered trade name of CRA
International, Inc., is available at http://www.crai.com.
About the Financial Services Roundtable
The Financial Services Roundtable represents 100 of the largest
integrated financial services companies providing banking, insurance,
and investment products and services to the American consumer. Member
companies participate through the Chief Executive Officer and other
senior executives nominated by the CEO. Roundtable member companies
provide fuel for America's economic engine, accounting directly for
$74.6 trillion in managed assets, $1.1 trillion in revenue, and 2.4
million jobs.
Source: Unum
Contact:
Unum
MC Guenther, 423-294-6108
Toll free: 866-750-8686
MGuenther@unum.com