Let’s talk about an often-overlooked gem in the realm of employee benefits: Long-Term Disability Insurance (LTD). Disability Insurance Awareness Month is coming up in May and it’s a wonderful opportunity to discuss paycheck protection with business owners. A crucial component of financial planning, LTD provides income replacement and financial stability for workers in the event of an extended period of illness or injury.
Even so, you’d be surprised how many employers don’t offer LTD insurance – and amazed how many people underestimate the risk of disability.
FACT:
Working-aged people are much more likely to become disabled than they are to pass away prematurely. Statistically, workers are 2-3 times more likely to need LTD income protection than they are to file a life insurance claim. Out of 1,000 covered employees annually, only 1 to 2 individuals may pass away and collect life insurance benefits, while a significant 4 to 7 individuals may need to rely on long-term disability benefits. Yet, 58% of employers offer life insurance, while only 35% offer long-term disability insurance. So, it's not just another ‘nice to have’ on the benefits form – it’s a game-changer for both employers and employees.
LTD: The Jewel of Benefits
As a broker, you know that when the worst happens, and a worker becomes too injured or ill to work for an extended period, long-term disability insurance will provide a critical safety net to cover a portion of income. Here’s stats to present to every employer you meet to show them why they should be offering LTD to their workers:
Longevity of Coverage: Benefits typically last anywhere from five, 10, or 20 years, or up until retirement age. The benefit amount can range from 60% to 80% of a monthly salary. Experts recommend a coverage amount of at least 60% of an employee’s post-tax income to ensure they can cover everyday expenses and bills.
Financial Stability Matters: Disability income protection is more important than ever with so many employees facing financial struggles. With only 1 in 4 Americans capable of covering more than six months of living expenses if they lose their primary source of income, the need for paycheck protection is glaringly evident. LTD steps in as a crucial lifeline during times of extended illness or injury, ensuring that bills get paid even when paychecks stop.
Retention Booster: Financial stress is a significant contributor to employee dissatisfaction. In fact, 41% of workers are living paycheck to paycheck, which can lead to a higher turnover rate. And a whopping 50 percent of adult Americans have no savings set aside for emergencies, according to the Federal Reserve Board. After the COVID-19 pandemic, with inflation and rising costs, 42% of Americans have less than $1,000 in savings. Most people really do need paycheck protection insurance.
Those living paycheck to paycheck include a wide range of demographics:
- 36% of workers earning $100,000 or more compared to 18% in 2019
- 52% of workers earning less than $50,000
- 53% of single parents
- 57% of those in poor or fair health
However, employees with LTD are less likely to leave their jobs for a marginal pay raise, knowing that their employer prioritizes their financial security.
Affordability Sells: Worried about the cost? Don’t be. The average monthly cost of employer-paid LTD insurance is less than one hour’s pay. It’s a small investment with significant returns for both employers and employees alike.
Value-Add for Employers: Offering LTD isn’t just about checking off a benefits box; it’s about showcasing to employees that you care about their well-being. In today’s competitive job market, companies that go the extra mile in providing comprehensive benefits are the ones that attract and retain top talent.
So, next time you’re sitting across the table from an employer, don’t forget to bring up the topic of LTD. Make sure they know the importance of LTD insurance. It’s not just a policy – it’s a lifeline for financial security, employee loyalty and retention, and peace of mind. And as a broker, it’s your ticket to providing real value to your clients. Help them bridge the gap with CoPower and ensure that every employee has the protection they need when life throws them a curveball.
CoPower offers popular short-term and long-term disability plans from Unum.
Reach out to your Amwins Connect Regional Sales Manager to learn more.