According to 2012 U.S. Census data, there are more than 21 million U.S. households with earnings between $100,000 and $200,000 annually, and more than 48 million households with earnings between $35,000 and $100,000. The first tier of households is comprised of the nation’s most affluent consumers and a coveted market segment that is targeted by the financial services industry for a wide range of products. The second tier is the core of what many would consider to be the middle-income market. Much research is currently being conducted to better understand the behaviors and opportunities of this segment as it relates to financial products -- including Individual Disability Insurance (IDI).
Worksite carriers offer voluntary products to occupation classes and income categories far below that for which IDI carriers may have interest. The typical worksite disability products are hollowed out versions of most IDI offerings and often distinguish between on-the-job or off-the-job disabilities. These policy forms are usually guaranteed or conditionally renewable, which lack the premium guarantees of top tier IDI products. Benefits periods are generally short term and may be offset for benefits payable by government programs such as workers compensation and Social Security. The conditions of renewability may include continuous employment with a sponsoring employer.
Existing middle market research has demonstrated that many consumers look to employers for access to financial products, including disability coverage. To this point, a number of top tier IDI carriers offer products that target their traditional markets through special employer-sponsored “multilife” programs. Designed to supplement group Long Term Disability (LTD) coverage and targeted at incomes in excess of $75,000, these programs often include guaranteed issue underwriting. It can be argued that these programs may already capture a portion of the upper middle-income consumers. Expanding multilife programs to include somewhat lower-income segments may be one conduit to increased middle-market sales for some IDI carriers.