Press release from Business Wire
Colonial Life Data Reveals Underinsured Industries
<p class='bwalignc'> <i><b>Manufacturing, Health Care and Education Workers May Not Have Enough Disability Coverage</b></i> </p>
Tuesday, April 30, 2013
Colonial Life Data Reveals Underinsured Industries12:28 EDT Tuesday, April 30, 2013
COLUMBIA, S.C. (Business Wire) -- Employees who work in manufacturing, health care and education may be underinsured for the important financial protection they need in the event of a disability.
Information from Colonial Life's customer database reveals workers in these three industries have a significant gap in the amount of disability insurance they purchase versus the amount typically recommended to help protect their income. Disability insurance generally replaces up to 60 percent of an employee's income.
Manufacturing employees: Manufacturing workers who purchase Colonial Life disability policies buy roughly half the amount of disability coverage they actually need. These employees only purchase enough coverage to protect 33 percent of their income instead of the recommended 60 percent.
Education employees: Employees who work in the education industry purchase enough disability coverage to protect just 37 percent of their income.
Health care employees: Health care workers buy only enough disability insurance to protect 36 percent of their income.
“These three industries alone represent more than 37 million working Americans who may be underinsured in the event of a disability,” says Steven Johnson, assistant vice president for product development, Colonial Life. “This kind of coverage gap puts them at tremendous risk, especially considering that more than half of all households say they couldn't raise $2,000 a month, if needed.”
Two-thirds of private sector American workers are not covered by employer-sponsored disability insurance against loss of income due to illness or injury, according to the Bureau of Labor Statistics1. And while most people think accidents are the leading cause of disability, illnesses are actually the most important reason for lost work.2
“The likelihood of experiencing a disability — whether short-term or long-term — is much more common than you might think,” says Johnson. “Although many businesses provide some form of group long-term disability coverage, there may be a coverage gap between the end of sick leave and the beginning of long-term disability coverage. Products such as voluntary short-term disability insurance can help employees fill the gap.”
Important Features of Voluntary Short-term Disability Products
When looking for a voluntary short-term disability product, here are a few key coverage features employers should keep in mind:
- Guaranteed issue. No health underwriting questions. Employers can feel comfortable that their employees can get a policy as long as any minimum participation and eligibility requirements are met.
- Portability. Employees can keep their coverage if they leave their jobs.
- “Your job” disability definition. Individuals receive benefits if they become disabled and are no longer able to perform their own jobs — not any job, as some coverage by other companies dictates.
- Incentives to return to work. Partial disability benefits encourage employees to return to work sooner.
- Potential for tax savings on benefits. When employees buy a voluntary short-term disability product at the worksite and pay for it after taxes are taken out of their paychecks, the disability coverage benefits payments aren't taxable. However, benefits paid under an employer-funded group short-term disability product are taxable.
- Fit with long-term disability. A voluntary short-term disability product should fit in with an employer's group long-term disability plan by offering a variety of elimination periods to help fill any gaps between when paid time off or sick leave ends and long-term disability coverage begins.
About Colonial Life
Colonial Life & Accident Insurance Company is a market leader in providing financial protection benefits through the workplace, including disability, life, accident, cancer, critical illness and supplemental health insurance. The company's benefit services and education, innovative enrollment technology and personal service support more than 79,000 businesses and organizations, representing more than 3 million working Americans and their families. For more information visit www.coloniallife.com or connect with the company at www.facebook.com/coloniallifebenefits, www.twitter.com/coloniallife and www.linkedin.com/company/colonial-life.
1 Bureau of Labor Statistics, May 2012 National Industry-Specific Occupational Employment and Wage Estimates.
2 Unum/Consumer Federation of America, “Facts about Disability Insurance,” 2012.
Colonial Life & Accident Insurance Company
Jeanna Moffett, 803-678-5445