Workers Risk Severe Financial Hardship Without Basic Life And Disability Insurance

S. Donnell MasakMany people do not have adequate life insurance or disability insurance.  This article explains the consequences when coverage is absent or insufficient.

S. Donnell Masak, CIC

COLUMBIA, S.C. (Dec. 5, 2011) — Many workers feel more strongly about insuring their homes and cars than insuring their ability to provide for their families after a death or disabling injury.(1) The result is a workforce underinsured for both life and disability protection — and vulnerable to severe financial hardship. The good news is employers can play a key role in providing access to this important protection and helping their employees understand their need for coverage.

That’s one of the findings in a new white paper released today by Colonial Life & Accident Insurance Company. “Back to the Basics: Building a Financial Safety Net Begins with Life and Disability Insurance” uses proprietary and industry research to show the risks American workers face without basic protection and how employers can help them become better educated and obtain coverage without affecting the bottom line.

“Families today are struggling to make ends meet,” says Jeff Koll, Colonial Life’s assistant vice president, life and disability products. “The death of a wage earner or an accident that puts the breadwinner out of work for a month or more can push many families into poverty. Basic life and disability insurance can help prevent that from happening. And it’s usually very affordable when offered as part of a workplace benefits program.”

Approximately 100 million Americans aren’t protected by private disability insurance, (2) and four in 10 U.S. adults have no life insurance. (3) Even many of those enrolled in an insurance program provided by their employers are concerned their coverage is inadequate: 35 percent feel their plans may not adequately cover their inability to earn an income for an extended time due to illness or injury, and 19 percent felt their plans may not adequately cover the death of a primary wage earner. (4)

Misconceptions drive lack of coverage

The majority of wage earners believe they have only a 2 percent or less chance of being disabled for three months or more during their working careers.(5) However, the actual odds of a worker being disabled for at least six months is 33 percent. (2)

“One reason for this discrepancy could be what workers think causes a disability,” Koll says. “Lifelong ailments aren’t the main cause of disabilities. The vast majority — 91 percent — are caused by common illnesses or health conditions such as cancer, childbirth or heart attack. (6) That means many disabilities aren’t covered by workers’ compensation.”

Most workers don’t have the financial resources to maintain their family’s current standard of living in the event of a disability or death of a wage earner. More than a third of households say they’d immediately have trouble meeting everyday living expenses if a primary wage earner died today. (7) In fact, 61 percent of American workers live paycheck to paycheck. (8) Their employers aren’t unaware of this: In a recent Colonial Life survey, 65 percent of employers said they didn’t think their employees would be able to maintain their current standard of living if they were unable to work for two or three months because of an illness or accident. (9)

Employers play critical role in protection

Employers can help their workers create an affordable yet strong financial safety net by offering voluntary life and disability insurance, the white paper explains.

“Voluntary insurance plans allow employers to offer cost-effective protection at little to no direct cost to the business,” Koll says. “By integrating voluntary benefits such as the basics of life and disability coverage with existing medical benefits, employers can go a long way toward helping employees protect themselves against financial exposure.”

The complete white paper is available in Colonial Life’s online newsroom at coloniallife.com.

Colonial Life & Accident Insurance Company is a market leader in providing insurance benefits for employees and their families through the workplace, along with individual benefits education, advanced yet simple-to-use enrollment technology and quality personal service. Colonial Life offers disability, life and supplemental accident and health insurance policies in 49 states and the District of Columbia. Similar policies, if approved, are underwritten in New York by a Colonial Life affiliate, The Paul Revere Life Insurance Company, Worcester, Mass. Colonial Life is based in Columbia, S.C., and is a subsidiary of Unum Group, one of the world’s leading providers of employee benefits. For more information, call Colonial Life at (803) 798-7000 or visit http://www.coloniallife.com.

1 Mitchel, James O., “2011 Insurance Barometer Study,” LIMRA, 2011.

2 Social Security Administration Fact Sheet, March 18, 2011.

3 “Fast Facts About Life,” LIMRA, 2011.

4 Colonial Life & Accident Insurance company, Harris Interactive Survey, 2009.

5 Council for Disability Awareness Disability Divide proprietary research, March 2010.

6 Council for Disability Awareness, “The Disability Guide, CDA 2010 Consumer Disability Awareness Survey,” March 2010.

7 Retzloff, Cheryl, “Trillion Dollar Baby — Growing Up,” LIMRA, 2011.

8 CareerBuilder.com survey, April 2011.

9 Colonial Life insurance and disability insurance survey, October 2011.

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