Report underscores 'critical role' of disability insuranceNews added by Benefits Pro on September 25, 2013

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By Dan Cook

When an employer-sponsored benefits package includes disability insurance, it’s generally one of those items that most employees skim right over if and when they read through their packet.

Yet a survey of employees who have used their disability insurance, sponsored by the Consumer Federation of America and carrier Unum, underscores its importance when injury or illness triggers it. The survey of 407 employees who turned to disability insurance for financial help was conducted by Mathew Greenwald & Associates.

Because the researchers conducted live interviews to gain their data, the report includes anecdotal comments from respondents as well as the crunched data. The numbers showed that although disability insurance definitely kept the wolf from the door for those who needed it, it was temporary fix at best. That’s because in most benefits plans, it is designed to make up for about 60 percent of an employee’s income.

Of those surveyed, nearly 60 percent said they “skipped or delayed some medical, dental, or vision care for themselves or family members” and reduced spending during the disability period “to the point of an uncomfortable lifestyle.”

Other signs that no one lives large on disability insurance:
  • 23 percent missed a mortgage or rent payment
  • 14 percent had to move out of their home because they could no longer afford to live there
  • 31 percent applied for community or government assistance to help pay for food.
  • 42 percent missed at least one payment for bills or consumer loans.
But there were plenty of flip-side benefits to having the coverage. For instance, without disability coverage:
  • an additional 49 percent said they would have missed a mortgage payment.
  • an additional 44 percent said they would have had to move out of their existing home.
  • an additional 33 percent would have applied for assistance.
  • an additional 41 percent said they would have missed a bill payment.
“Beneficiaries reported not just financial, but also social, psychological, and health-related benefits of disability payments,” the survey said, citing the following data:
  • 77 percent said disability benefits helped them avoid strain with spouse or partner.
  • 78 percent said benefits helped them maintain their self-esteem as a provider for their family.
  • 88 percent said benefits helped them maintain a healthy emotional outlook.
  • 68 percent said their health would have been worse without benefits.
The comments from those interviewed were powerful endorsements of employer sponsored disability coverage. Among them:
  • “I probably would have gone off the deep end. It would have been too much to bear with the health problems I have.” (Woman in her 50s)
  • “I would have felt awful, scared, stressed.” (Man in his 20s)
  • “Without the benefit payments there would have been home pressures. I would have felt dependent, where I don’t have control of my life, trapped, child-like.” (Woman in her 40s)
  • “My life would have been a whole lot worse without my employer’s disability insurance, because I wouldn’t have been able to pay my bills, which would have meant I would have probably turned to welfare or Medicaid.” (woman aged 65)
Many of the respondents said that few employees understand the value of having employer-provided disability insurance.

“A large majority of beneficiaries (88 percent) said that employers should do a better job of explaining disability insurance. And many (85 percent) agreed that government should inform the public about the risk of becoming disabled and its financial impact,” the survey concluded.

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