Research by CFA and Unum shows workers know little about disability
insurance, despite expecting financial hardship if unable to work
Once informed about employer-sponsored coverage, almost all workers
want this insurance and are willing to pay for it
WASHINGTON--(BUSINESS WIRE)--
In a national survey of nearly 1,200 employees, the Consumer Federation
of America (CFA) and Unum learned that workers know little about group
disability insurance, even important characteristics of what coverage
they may have. But when given information about this financial
protection benefit, nine out of 10 employees say they want this coverage
and would pay for it.
In the CFA-Unum
survey, only 13 percent of all employees say they know “a lot” about
this insurance, and less than half of those who say they have coverage
know how much it costs (41%) or what its benefits are (47%). When given
information about disability insurance, a very large majority (90%) say
they want this coverage, and nearly as many (86%) say that, if required,
they would pay half of a $30 monthly premium, with more than half (56%)
saying they would pay all of this premium, to gain income protection.
“Almost all workers wisely want disability insurance protection and are
willing to help pay for it,” said Stephen Brobeck, CFA’s Executive
Director. “But since only about one-third have long-term disability
insurance, there is a huge gap between worker desire for coverage and
the extent of actual coverage.”
Group disability insurance provides financial protection to employees
unable to work because of injury or illness. Depending on the specific
plan, within one week to six months after an employee stops working, he
or she begins receiving payments equal to about 60 percent of his or her
income. About one-third of workers are protected by long-term disability
insurance, whose monthly premiums – paid for by the employer, employee,
or some combination – usually range between $10 and $30.
Employer-sponsored disability insurance provides income protection that
is not available from workers’ compensation or Social Security
Disability Insurance. Workers’ comp is available only to those employees
who are injured or made ill on the job, but the large majority of
injuries and illnesses causing work loss are suffered away from work.
Social Security Disability Insurance benefits average only $13,000 a
year.
“The ability to earn a living – our income – is the most valuable asset
we have, and protecting that asset is increasingly important,” said
Thomas R. Watjen, president and CEO of Unum. “A disabling illness or
injury can cause real financial hardship for many individuals and their
families, and disability insurance creates a backstop against
significant income loss during the period of absence, recovery and
return to work.”
The high value employees place on the availability of disability
insurance, and their personal desire for insurance coverage, certainly
reflect the fact that most workers say they would suffer financial
hardship if not able to work. More than three-quarters of all employees
(77%) say they would suffer great or moderate financial hardship if they
did not work for three months because of injury or illness, with half
(50%) indicating great hardship. And more than three-quarters (78%) say
they would experience great financial hardship if they did not work for
12 months.
Lower-income workers are much less likely to have access to disability
insurance coverage, but are more likely to want this coverage, than are
upper-income workers. Fewer than half (46%) of employees with household
incomes under $25,000, but 80 percent of those with household incomes of
$100,000 or more, say that their employer offers disability insurance.
Yet, 72 percent of the lower-income group, but only 51 percent of the
upper-income group, say that it is very important to them personally to
have this insurance coverage. And lower-income workers are nearly as
willing as higher-income workers to pay for this coverage.
“As an employer, I consider group disability insurance to provide
important income protection for our employees,” said Brobeck. “This
insurance complements and supplements better-known workers’ compensation
and Social Security Disability Insurance programs. The Consumer
Federation of America believes that consumers, most of whom rely on
wages and salaries for purchasing power, would be well-served if all
employers offered employees the opportunity to purchase disability
insurance.”
Additional highlights of the CFA-Unum
survey include:
- Employees Lack Knowledge About Reasons for Disability, Disability
Insurance, and Their Own Insurance Coverage
Employees don’t understand the reasons for disability that result in
time away from work, underestimate the extent to which workers will miss
work, and know little about group disability insurance, including the
coverage they may currently have.
-
Nearly twice as many employees think that injuries (66%), not
illnesses (34%), keep employees from work for at least three months,
but the large majority of all disability claims paid are for illnesses
and health conditions.
-
Employees think that 25 percent of those who become disabled and are
unable to work for at least three months remain disabled for at least
two years. But in actuality, it’s twice that. Half of the disabled
workers who are out of work for three months remain disabled for more
than two years.
-
Only 13 percent of employees say they know "a lot" about group
disability insurance, while just over one-third (35%) say they know
only "a little." More than half (52%) say they know "not very much" or
"nothing at all."
-
Among employees who think they are covered, fewer than half say they
know how much it costs (41%) or what the benefits are (47%), and
little more than three-fifths (63%) say they know whether they "pay
any or all of the monthly payments."
- Employees Support Policies to Increase the Availability and Quality
of Group Disability Insurance
Because employees strongly support the value of group disability
insurance for all employees and for themselves personally, it is not
surprising that they support policies to increase its availability and
quality.
-
More than three-quarters of employees (76%) say it is a good idea for
employers to automatically enroll employees in a disability insurance
program that these employees could decline only at the outset and
annually thereafter.
-
When employees are informed that small employers are least likely to
offer disability insurance, a large majority (71%) favor "the federal
government providing these employers a one-time tax incentive to help
them create a group disability insurance option."
-
More than three-quarters (77%) favor the creation of "independent
standards that were used to evaluate individual employer plans."
Despite the ambiguity of the question – what are the standards and who
creates and enforces them? – most employees said these standards are a
good idea.
The CFA-Unum
survey was administered by Opinion Research Corp. International
(ORC) over three weekends in late March and early April this year by
cell phone and landline. ORC interviewed 1,191 full- and part-time
employees who are broadly representative of the population of all
employees, then weighted the survey data to more exactly represent the
characteristics of all employees. The margin of error of the aggregate
data is +/- 3 percentage points. Additional information about the survey
methodology, and the survey data themselves, are available on request
from CFA. Also available is a CFA-Unum report on the survey data,
"Employee Knowledge and Attitudes About Employer-Provided Disability
Insurance."
CFA is a non-profit association of nearly 300 consumer groups that was
established in 1968 to advance the consumer interest through research,
advocacy, and education. Unum (NYSE: UNM) is a leading provider of
employee benefits in the United States and the United Kingdom. In the
future, the two organizations will seek to increase consumer, employee,
employer, and policymaker understanding of group disability insurance
through dissemination of these survey findings and related information.
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CFA
Jack Gillis, 202-737-0766
or
Unum
MC Guenther,
866-750-8686
Source: Unum