At one point in my life, I spent five years as a single mom working three jobs just to provide for my daughter and me. During that time, "what if?" ran constantly through my thoughts. What if I lost one of my jobs? What if I had an accident and couldn't work? What if I couldn't pay the utility bills or put food on the table for us?
I was so passionate about coming up with answers to those "what if" questions that I decided to make a move into the insurance industry. I realized I wanted to help other people like me learn about the value and importance of disability insurance and other benefits. I'm still passionate about benefits.
Employees need to protect their paychecks. With May designated as Disability Insurance Awareness Month by the LIFE Foundation (www.lifehappens.org), now is the opportune time to talk to your clients about why their employees need disability insurance.
Why voluntary short-term disability insurance is so important
For all working Americans, being able to replace some of their income if they can't work because of an accident is critical. Most people make sure they protect their homes and cars, and they feel comfortable having major medical insurance to pay the doctor. However, many don't realize they also need to insure their paychecks.
Employees may think if they have a great health insurance plan, they're covered. But what if they can't work for six weeks as a result of a car accident? Even if the other driver is at fault, it could be several months before they get a payment from the other driver's insurance company. In the meantime, they need to be able to put food on the table for their families, yet their utilities, mortgage and other bills continue to arrive.
I've been in the voluntary benefits industry for 13 years, and you can bet employee paycheck protection is something we talk about with brokers, employers and employees. Income protection is even more important in today's economy. Now, more than ever, families rely on two incomes. Both parents work because they have to. If one breadwinner can't work and loses a substantial part of his or her income, the family won't be able to cover its household expenses. Employees need disability coverage.
Disability insurance offered at work can help provide employees with a portion of their incomes while they're disabled. They can use the disability benefits to pay the mortgage, uncovered medical expenses, home modifications, etc.
Many employers provide group long-term disability coverage as part of their benefits programs. This is a great start to helping employees get protection for their income. However, there's another step employers can take: Add voluntary short-term disability to help fill the gap between when paid-time off or sick leave ends and long-term disability kicks in.
How voluntary short-term disability works
Why should an employer package voluntary short-term disability with group long-term disability? Because it can fit hand-in-glove with the employer's long-term disability plan.
Let me explain. Most employers provide an employer-paid group long-term disability plan, typically with a 90- or 180-day elimination period. However, when new employees join the company and hear that disability coverage is part of the benefits package, they may think they're covered if they became disabled. When they experience a disabling injury, they suddenly realize the disability plan won't start paying until 90 or 180 days later. Even long-time employees may not understand there's an elimination period before disability coverage begins.
The solution is for employers to also offer voluntary short-term disability coverage that would cover the gap between the end of company-sponsored paid time off and the long-term disability plan's elimination period. For example, if the paid time off is two weeks, your client could offer a 14-day elimination period on the voluntary short-term disability plan. This approach can help create a seamless income stream for disabled employees.
We recently had the chance to make a huge difference for an employer who had to cut back carry-over sick days to only five a year. He already offered a group long-term disability plan, so we suggested he add a voluntary short-term disability plan with a seven-day elimination period to cover the gap until the long-term disability coverage became effective. With this solution, the employer felt that he was able to help ease the transition to fewer carry-over sick days.
Key features to look for
Guaranteed issue is a must-have feature because all employees at the company can get coverage. Guaranteed issue means the voluntary short-term disability plan works more like a group product with no health underwriting if participation and eligibility guidelines are met.
With it, employees are treated fairly, and you can get better participation. Both you and your clients can feel more comfortable that eligible employees can get coverage as long as any minimum participation requirements are met.
Other features of voluntary short-term disability that I like are:
Portability. Employees own the policy and can take it with them when they change employment. If their long-term disability plan is a group plan, they'll lose it if they leave their company.
"Your job" definition. Some plans define total disability in terms of "your job" for the entire benefit period. The trigger point for the benefit payment is an insured's not being able to do his or her own occupation. Other products may not pay "your job" benefits or may only pay "your job" benefits for a small time period, perhaps a year, then change to an "any job" definition.
Partial benefits promote return to work. Some plans provide partial benefits to encourage employees who are totally disabled to come back to work earlier. This feature allows employees to ease back in to work and still receive a partial disability benefit. Disability plans without partial benefits may encourage employees to stay out on disability rather than coming back to work for part-time pay and risk losing disability benefits.
Voluntary short-term disability coverage also works well when packaged with other voluntary benefits, such as life, accident and critical illness plans. This can help your clients round out their benefits programs.
Benefits education is critical
Effective benefits communication and education can help employees better understand their disability gaps and make smarter decisions. This is another big must-have for me. Employees may get a benefits folder and a short overview of their benefits programs; however, they don't always take the time to review their benefits completely. Only when they file a claim do they realize their coverage isn't what they expected.
Having group meetings and one-on-one sessions with a benefits counselor gives employees the opportunity to sit down and talk with someone about their coverage and determine their own needs and coverage gaps. In addition, employees who aren't comfortable asking questions in a group meeting can get answers. One-on-one benefits sessions can also help build employee loyalty for the company and assist employees in making better decisions to cover their financial risks.
I'm passionate about voluntary short-term disability coverage. During those years when I worked three jobs to support my family, a plan like this would have helped answer my "what if?" situations. Voluntary short-term disability can help your clients' employees answer their "what if" questions.
Jan Robinson is territory sales manager for the Missouri/Southern Illinois territory of Colonial Life & Accident Insurance Company. Her office is located in St. Louis. You can contact Robinson by calling (314) 993-2564, ext. 26, or e-mailing her at JRobinson@ColonialLife.com.
