Electronic Application Makes Inroads Into Group DI

Electronic and digital processes are making headway into the group disability insurance world. This means that agents, consumers and insurers will be able to process and manage disability contracts on more hardware platforms faster and with more accuracy.

The latest development comes from Guardian Life’s electronic policy delivery service for Supplemental Income Protection Program policies, which the insurer offers in addition to a basic disability policy offered through employers.

“Consumers told us they want to enroll and access their policies from their tablet, cell phone and computer,” Lawrence Hazzard, vice president of Product Strategy for Disability Income, said in a news release. “We listened and delivered.”

Guardian’s “end-to-end” electronic service offers policyholders the ability to enroll electronically, sign using electronic signature capability, download policies from a website and manage the policy via the internet portal, the company said.

Long-term disability income coverage typically pays 60 percent of a policyholder’s paycheck — $30,000 on a $50,000 salary — in case of disability suffered due to illness or an on-the-job accident.

Supplemental disability insurance fills the gap for workers who feel they can’t live on 60 percent of their income.

Since employees benefit from group rates, disability insurance bought through the workplace is cheaper than if employees were to go shop for it in the individual market.

Advantages Flow to Insurer

Disability insurance specialist Larry Schneider said speed and efficiency usually offer advantages, but those advantages typically flow more to the insurance company than to the consumer as faster policy issuance translates into more policy sales.

“There's more advantage to doing this for Guardian rather than for the consumer, even if the consumer sees some nominal gains in efficiency,” he said.

Consumers benefit the most when terms, conditions and pricing — as opposed to policy management — are tilted more in favor of the policyholder. However, Schneider also noted that Guardian already sells competitive and highly rated disability policies.

“They already have a Ferrari and now they’re adding more gas,” he said.

Participation rates in short- and long-term disability insurance programs, while on the increase over the past 15 years, remain low, government statistics show.

In 2014, only 33 percent of private industry workers participated in a group long-term disability program and only 39 percent participated in a short-term disability program, according to the National Compensation Survey.

Not every occupation has access to disability coverage. Workers in service occupations such as waiters, hair stylists and dental hygienists have the lowest access rates for short-term and long-term disability insurance plans, the survey found.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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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 [email protected].