Why Aren’t Workers Buying DI?

What does the recent federal government shutdown have to do with workplace disability?

Both are examples of how vulnerable people are to income volatility, said Leston Welsh, head of Disability and Absence Management at Prudential Group Insurance.

Prudential surveyed employees affected by the 35-day shutdown that occurred between Dec. 22 and Jan. 25, and learned that nearly half of them fell behind in their bills during that time.

“We can talk about the numbers and the different things that happened, but these are real people who told us what happened to them, and this is a wake-up call for how vulnerable people are to income volatility,” Welsh told InsuranceNewsNet.

Prudential released a white paper on the value of disability insurance that showed how ill-prepared workers are to handle a disruption in their income.

Although the government shutdown is a well-known example of a disruption in income, Welsh said it’s more likely that Americans will see their income grind to a halt as a result of an illness or disability.

“From an economic standpoint, we do know disability has an impact, not only on your retirement, but on your heath and your family,” he said.

With the risk of an illness or injury bringing paychecks to a halt, you would think workers would be lining up to buy disability insurance. But Welsh said about 50 million American workers have no such coverage.

Why?

“It’s a challenge we have dealt with for decades,” Welsh said. He said there are a number of myths surrounding DI, and carriers and brokers need to dispel those myths.

One big myth, he said, is that workers compensation and Social Security will cover employees who become disabled. Another myth – common among younger workers – is that their chances of experiencing a disability are slim, even though 25% of younger workers will become disabled at some point in their working lives.

Many workers believe that DI is costly and difficult to obtain, Welsh said.

“And then we have the ‘it won’t happen to me’ myth,” he said. “People associate a disability with someone being in a wheelchair. But we are seeing more behavioral health disability claims coming in these days.”

Finally, people believe they don’t need DI because they have enough savings to carry them through a disabling event, Welsh said. “They say, ‘I should be fine.’ But the reality is that half of Americans struggle to meet their expenses.”

What can brokers and carriers do to break through the myths about DI? Welsh had some suggestions.

1. Partner with employers to develop multichannel personalized communication and enrollment strategies to help workers overcome their barriers to buying DI, such as procrastination or optimism.
2. Collaborate with employers to incorporate financial wellness into their benefits enrollment to help the workers better understand how their benefits tie in to their financial wellness. “I’m a firm believer that your income is your most important asset,” Welsh said. “That’s where DI comes in.”
3. Brokers could educate employers on the power of automatic enrollment in DI.

Welsh said it’s crucial for brokers to help workers dispel the myths surrounding DI and get enrolled in coverage.

“If people understood the chances of their becoming disabled and the impact it would have on their finances and their families, they would sign up for DI immediately,” he said.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].