February 16, 2015 INN Exclusives

DI Keeps Up With Changing Workforce

By Cyril Tuohy InsuranceNewsNet

Charlie Munger, 91; Jimmy Carter, 90; Hank Greenberg, 89; Warren Buffett, 84; George Soros, 84; Charles Koch, 79; Carl Icahn, 78; Carlos Slim, 75; Peter Lynch, 71; Larry Ellison, 70; Donald Trump, 68; Richard Branson, 64.

Question: What connection does each businessman have with the other?

Answer: They’re all still (ostensibly) working (even though they don’t need to).

Not only are top executives working longer but employees are working longer as well. As the risk profile of older working adults changes, so do the disability policies designed to protect against income loss.

Bill Silvanic, senior vice president of worksite and voluntary insurance with MassMutual, said many people want to be able to adjust their disability coverage to meet changing needs.

Not that the wealthiest men and women in the world represent the kind of people in the market for a policy that covers 60 percent of base pay, sold at the worksite on a voluntary basis.

After all, the Warren Buffetts and Richard Bransons of the world hardly need to protect their paychecks, if they even pull down a salary at all.

Still, the list of big names cited above makes a point. People are working into their 70s and 80s, even into their 90s. Some work full time, others part-time. Still others prefer working only temporarily.

Older employees’ flexible schedules lead to variability in earned income.

With record numbers of Americans older than 65 continuing to remain in the workforce — either by default or by choice — carriers see an opportunity to adjust their disability coverage, and sell more of it.

To accommodate the changes of an aging workforce, MassMutual announced earlier this month that it would increase the maximum issue age of its MaxElect 13 disability income protection product to 80 years old and drop rates for workers between the ages of 65 and 70.

The policy also offers a larger discount for employer-paid coverage and is available on a guaranteed issue, the company said.

Surveys reveal both baby boomer and Generation X employees intend to remain at work longer, in part to take advantage of the employer-sponsored benefits.

Remaining on payroll is a way for workers to retain health coverage, which gets more expensive every year, or keep generating more income to shore up retirement assets.

In 2013, the Social Security Administration released this surprising statistic: About one out of every four 20-year-old workers in 2013 would become disabled before he or she retired, and 37 million Americans — 12 percent of the population — are classified as disabled.

Tom Marra, president and CEO of Symetra Financial, said in a recent conference call with analysts that the company’s group life and disability segment is expected to grow in 2015.

MassMutual’s MaxElect 13 announcement in January wasn’t exactly a surprise to experts who keep tabs on the voluntary market.

Eastbridge Consulting Group issued a report last year that said prominent voluntary market trends in 2015 would include carriers launching more guaranteed issue protection products and lower participation requirements.

“Nearly three-quarters of the carriers surveyed plan to introduce new products this year, with many planning to introduce more than the typical number,” Eastbridge said in a news release.

Eastbridge, which publishes the Voluntary Product Trends Frontline Report, also said carriers would look to update their voluntary short-term disability policies to make them more portable.

Employees who move around or seek more flexibility in working arrangements favor portability, not unlike a 401(k) retirement account.

Voluntary benefit sales are on the rise as health reform injects change and uncertainty into the purchase of benefits.

Eastbridge reported that in 2013, voluntary and worksite sales were estimated at $6.64 billion, up 10.1 percent from $6.03 billion in 2012.

Eastbridge estimates that 43 million workers already own at least one voluntary benefit product, but that another 71 million employees have no voluntary benefit product.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at cyril.tuohy@innfeedback.com.