Disability Insurance: An Undervalued Employee Benefit

Disability insurance may sometimes be the forgotten benefit in an employee’s health and welfare benefits package since no one plans on becoming disabled. While disability coverage may not be on the top of employees minds, the Council for Disability Awareness says that more than one in four of today’s 20-year-olds can expect to be out of work at least a year due to disability before they reach their normal retirement age. The Council for Disability Awareness study also concluded that more than 51 million working adults in the US do not have disability coverage beyond the benefits offered through Social Security. In addition to that lack of coverage only 48 percent of American adults indicate that they have enough savings to cover three months of living expenses in the event they stop earning income.

A recent BenefitsPro article highlighted a few common misconceptions about income protection coverages including Worker’s Comp and Social Security. Most employees don’t realize that Worker’s Comp only pays employees in the event that they are injured or disabled in a work related incident. Additionally, in order to qualify for Social Security benefits there is a much more rigorous process to be approved versus a company sponsored plan. Even if approved for Social Security disability, the average Social Security benefit is just $14,808 annually and the maximum amount that an individual can receive is $34,332 annually. To many employees this would be a significant drop in income and would make maintaining their current lifestyle very difficult.

While an employer paid disability policy is common in larger companies it is not always in the budget for all companies. Even if an employer cannot contribute towards the premium, they can still offer disability on a voluntary basis to their employees. The advantage of a company sponsored voluntary program versus an individual policy is that there could be a lower premium and no individual underwriting.

If you are interested in offering either a company funded disability benefit or a voluntary disability program reach out and talk to us.