Not Offering This Benefit, Yet?
Not Offering This Benefit, Yet?
Most employers already offer Supplemental Life Insurance, on a voluntary basis for all employees, or on an employer-paid basis for Executives. But surprisingly, only about half of Fortune 500 Companies offer Supplemental Disability Insurance Plans. Why, given that the American worker has a 4 x greater likelihood of becoming disabled, versus dying, during the working years?
One reason may be perceptions. With some exploration, these perceptions are truly misperceptions. Here are two common misperceptions:
1. Enrollment/Guarantee Issue:
o Misperception:
Supplemental Voluntary Group Life is easy to enroll, since it is offered on a Guaranteed Issue basis. Supplemental Disability Insurance is hard to enroll and not offered on a Guaranteed Issue basis.
o Truth:
Supplemental Disability Insurance is easier than ever to enroll. With the right negotiation, it can be offered on a Guaranteed Issue basis, or Guarantee Standard Issue basis, making enrollment easy.
Often, Employer-paid Supplemental Disability Insurance can be enrolled just like Employer-paid Group LTD – via a census.
Voluntary Supplemental IDI can be enrolled via a web platform, which includes decision-making support and a personalized illustration. Communication and educational support can be provided by an Executive Benefit Specialty Broker, in conjunction with the carrier. The “employer lift” is minimal. This product is typically offered “off-cycle” from the health insurance/open enrollment period.
2. Cost:
o Misperception:
Supplemental Life Insurance is inexpensive. Supplemental Disability Insurance is extremely expensive.
o Truth:
Supplemental Disability Insurance is very affordable, often costing less than 1% of compensation. Carriers offer deeply discounted premiums, resulting in group-like pricing. Today’s benefit, offered through the employer, is very affordable, sometimes less than Group LTD.
Supplemental Disability Insurance can be offered on an Employer-paid basis, or on a Voluntary Basis.
Employer-paid Executive Supplemental Disability Insurance often costs a fraction of a cost compared to employer-paid Supplemental Executive Life Insurance.
Group Long-Term Disability (LTD) insurance provides a good foundation for income protection, in the event of a disability. However, Group LTD plans inherently have limitations in protection levels, and present gaps in coverage. Simply put, Group LTD protection does not provide enough protection by itself.
Group LTD benefit maximums leave highly compensated employees under-protected (less than the plan’s target protection level); common forms of compensation such as bonus, are not covered in 78% of LTD plans; and benefits are often taxable at time of claim. Even if the common LTD plan’s target replacement level of 60% is achieved, 60% replacement still results in an income shortfall during a disability.
With higher medical expenses incurred during a disability, coupled with the higher cost of living in today’s inflationary environment, consider offering a Supplemental Disability Insurance plan that can protect up to 75% or 80% of pre-disability earnings.
Supplemental Disability Insurance can cover total compensation, is fully portable, offered on a Guarantee Issue basis, easy to install, can be employer-paid or voluntary, and is a very affordable benefit.
May is Disability Insurance Awareness Month (DIAM), and it is a suitable time to explore offering this benefit program.
Navis Benefits Group, LLC specializes in Supplemental Disability Insurance plans, and can help you design, market, install, and administer the plan.
