Today, the Consumer Federation of America (CFA) and Unum released the
results of a survey of more than 500 benefits decision-makers at small
employers regarding their views on long-term disability insurance (LTD).
The findings reveal that employers, whether they offer the benefit or
not, understand the value of this insurance for employees, and that
those who offer it also believe it serves the interests of their
company. Employers not offering LTD are more likely to overestimate the
cost of this insurance, underestimate the desire of employees for this
coverage, and to experience difficulty managing disabled employees and
their absences.
“In general, group disability insurance serves the interests of small
employers and their employees,” noted Stephen Brobeck, CFA’s Executive
Director. “By making this insurance available, employers help protect
the personal income needed by consumers,” he added.
The research released today represents the third joint
research effort by CFA and Unum. In April 2012, the two
organizations released
the findings of a nationwide survey of employee attitudes and
knowledge about disability insurance, and in September 2013, they released
a report based on interviews with individuals who had become
disabled and were receiving disability benefits through their employer’s
plan.
“The ability to earn a living – our income – is the most valuable asset
we have, and protecting that asset is increasingly important,” said
Richard P. McKenney, president and CEO of Unum. “Small employers can
play a significant role in helping their employees insure against some
very real risks to their financial stability.”
Large Majority of Employers Agree That LTD Provides Important
Financial Protection
Employers overwhelmingly (94%) disagree that “most employees have enough
savings to cover normal living expenses if they become unable to work
due to illness or injury.” And only a small minority of all respondents
(13%) believes that Social Security and workers’ compensation “will
cover most of a worker’s income if they become injured or ill.”
Thus, it is not surprising that a large percent of employers believe
that most (60% or more) of their employees would face significant
financial hardship, like home foreclosure or bankruptcy, if they were
disabled and unable to work for at least six months.” Moreover, 86% of
those interviewed agree that it is important “for employees to have
long-term disability to protect them financially if they became
disabled.”
However, according to LIMRA, less than half (47%) of employers with
10-99 employees offered long term disability insurance in 2014.1
And, based on the current survey results, less than half of these small
employers have a policy in place for handling employee absences due to
serious illness or injury.
Employers Without LTD Often Misunderstand Employee Interest and
Benefit Costs
Many employers without LTD cited employee resistance. When asked why
their company did not offer LTD, about two-thirds (64%) indicated that
“the cost is too high for employees” and more than half (57%) said that
“not enough employees will enroll.” Many (40%) said that “employees
would not value or appreciate the benefit.” Yet, a survey conducted in
2012 found that 86% of U.S. workers would choose to have disability
insurance, even if they had to pay some of the cost for it.2
While 6 in 10 (59%) employers without LTD cite cost to the employer as a
major reason for not offering it, many of these employers (38%) also
admit that they are not knowledgeable about what the monthly premiums
would be. And in fact, the results of the survey reveal that employers
without LTD probably overestimate the cost of providing the
benefit. Although 42% of employers without LTD thought that the benefit
would cost $30 or more per worker, a considerably lower percentage (30%)
of employers that offer the benefit indicated that the premium was
$30/month or more per worker. Based on industry data, the typical range
for LTD premium per month in employer sponsored programs is $20-$30.3
Employers With LTD Think It Benefits Both Them and Their Employees
Employers with LTD believe that this coverage serves the interests of
its employees. A large majority (86%) says that employees value and
appreciate the benefit. Eight in 10 (81%) also believe that offering LTD
is “what a responsible employer does.”
“An employee shouldn’t have to worry or stress about paying bills or
expenses while dealing with an injury or illness.”
But they also believe it is not just the employees that benefit from
this coverage: 82% report that attracting and retaining employees is a
reason for offering LTD and more than half (55%) say they offer it in
order to reduce company costs if an employee goes out on disability.
Half (50%) say that offering LTD also improves productivity and “gets
employees back to work faster.”
“It will provide a peace of mind and allow them the recovery that
they need to enable them to heal as quickly as possible.”
Indeed, employers offering LTD seem to have an easier time managing
disability-related absences. Those who offer LTD were far less likely
than those who do not to say that their experience managing a disabled
employee’s absence was difficult (28% versus 46% of those who did not
offer LTD).
About the Survey
This online survey of benefits decision-makers was conducted by
independent research firm Greenwald & Associates on behalf of CFA and
Unum in April 2015. A total of 504 benefits decision-makers at companies
with 10-99 employees participated in the survey. Additional information
is available at unum.com/cfastudy.
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 United Kingdom.
1 LIMRA, “Keeping Up with the Times” (2015).
2
Consumer Federation of America and Unum, “Employee Knowledge and
Attitudes about Employer-Provided Disability Insurance” (2012).
3
LIMRA, "Quarterly U.S. Group Disability Sales and In Force Survey"
(2014) and Unum Internal Data (2014).
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