Find Small Businesses Don't Know Disability Risk
NU Online News Service, Feb. 11, 10:49 a.m. EST?Sixty-seven percent of small employers say disability coverage for employees is too costly and few know what the odds are that an employee, aged between 35 and 65, will suffer a serious disability, a survey released today found.
The findings by the American Council of Life Insurers in Washington, D.C. were in a study titled "Disability Income Insurance: Penetrating the Small-Employer Market."
ACLI said the study, which polled 481 small employers with 100 or less employees, was undertaken to determine what changes might lead small businesses to reconsider a decision not to offer the insurance.
ACLI said it found that nearly half of the respondents believe the likelihood is one-in-50 of becoming disabled. The actual likelihood is one-in-three.
ACLI's survey examined why some small employers offer disability income insurance coverage to employees and why others decide against it.
The report, ACLI said, highlights the misunderstanding among small employers about disability risk and its effects on benefit plan offerings.
Government statistics, ACLI said, report that the majority of American workers in small private firms do not have disability income insurance.
Long-term disability income insurance helps workers and their families pay living expenses while a wage earner is unable to work. It offers cash to help with mortgage payments, rent, groceries, utility bills, and other expenses. This insurance typically pays a percentage of the policyholder's annual income.
"Since small businesses employ the majority of America's workforce, it is critical employers understand that disability income insurance plays a vital role in their workers' financial futures," said Terri Sorota, ACLI senior counsel.
The study findings show that 42 percent of small employers who do not offer disability income insurance said that they would be more likely to do so should a worker become disabled.
However, 77 percent believe that the coverage is too expensive. Fifty-eight percent felt their business activities do not present a high-enough disability risk to warrant coverage.
Conversely, of the 67 percent of employers that offer disability income insurance, 74 percent say that providing this insurance aids them in recruiting and retaining productive employees, as well as improving employee attitudes and performance.
"It is important that small employers understand employees can share in the cost and that disability coverage is not limited to work-related disabilities," added Ms. Sorota.
"It is clear from these findings that employer awareness of the features and benefits of disability income insurance is lacking. We hope this study will help change the way small employers manage disability risk."
The report can be read online at: http://www.acli.com/ACLI/About+ACLI+nonmember/Industry+Facts/Disability+Income+Insurance%3a+Penetrating+the+Small-Employer+Market.htm.
ACLI said printed copies of the study are available by contacting Sarah Bohn at (202) 624-2419 or [email protected].
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
