Widening Income Protection Gap Puts Americans At Risk

Schaumburg, IL.—November 17, 2015—A growing number of Americans have little or no income protection, leaving millions at risk of slipping into poverty, according to a new white paper from Zurich Insurance and Oxford University in England.

The widening of this so-called income protection gap is being caused by several factors, including: An aging population; reduced funding for government social programs; inadequate savings and insurance protection for individuals and families; and rising disability levels.

Income protection gap is defined as the reduction in household income caused by the death or incapacitation of an adult wage earner on whom the household relies, taking all public and private sources of replacement income into account.

The income protection gap is not just a problem for individuals and families, but also for employers, government and society as a whole, the paper concludes. That’s why Zurich believes it will take a multi-stakeholder approach to close the gap.

“As the U.S. population ages and social programs designed to support retirees and the unemployed run out of funds, more Americans are finding they don’t have enough money in their nest eggs,” said John Miskel, head of Corporate Life & Pensions for Zurich Global Life in North America. “There is no silver bullet to solve this global issue. Instead, the solution will have to come from the combined efforts of individuals, families, employers and government.”

The paper suggests that in the absence of increased funding, governments can use tax incentives to encourage employers and/or third-party providers to address any gaps.

Employers can make a difference too, by offering workplace disability and death coverage that can help protect employees against the loss of income. In the absence of employer-sponsored benefit programs, many employees may not be able to afford individual disability and life insurance policies or simply would not make it a priority to seek coverage. Inadequate income protection and poor job prospects can force disabled employees to keep working, even at reduced capacity.  This “presenteeism” issue is already widespread and estimated to cost the U.S. businesses more than $150 billion a year.

The paper, “Income protection gaps: a rising global challenge,” was produced by Zurich Insurance and the Smith School of Enterprise and Environment at Oxford University. It is available online at https://www.zurich.com/_/media/dbe/corporate/docs/whitepapers/risk-nexus-income-protection-gaps-november-2015.pdf?la=en. For more information about the income protection gap, visit the Zurich website at https://www.zurich.com/en/industry-knowledge/protection-gap.

About Zurich

Zurich Insurance Group (Zurich) is a leading multi-line insurer that serves its customers in global and local markets. With more than 55,000 employees, it provides a wide range of general insurance and life insurance products and services. Zurich’s customers include individuals, small businesses, and mid-sized and large companies, including multinational corporations, in more than 170 countries. The Group is headquartered in Zurich, Switzerland, where it was founded in 1872. The holding company, Zurich Insurance Group Ltd (ZURN), is listed on the SIX Swiss Exchange and has a level I American Depositary Receipt (ZURVY) program, which is traded over-the-counter on OTCQX. Further information about Zurich is available at www.zurich.com.