There is good news and bad news when it comes to Generation Y workers and disability income insurance.

The good news is that this demographic is very interested in the concept of obtaining financial protection through their employers' benefits offerings - more so even than older generations.

MetLife's 10th Annual Study of Employee Benefits Trends released earlier this year found that nearly half (49%) of all surveyed employees say that because of the economy they are counting on employers' benefits programs to help with their financial protection needs. That percentage jumps to 66% for Gen Y. Contributing to this interest may be underlying financial concerns including the fact that the study found that approximately two-thirds of Gen Y workers age 21 to 31 are very concerned about their family's financial security if the principle wage earner is unable to earn an income due to illness or injury. Add into the mix a generation that has diverse life stages: The MetLife study found that 55% of this demographic are married or in a domestic partnership, 46% are parents of young children, and 13% provide care for an elderly parent or relative.

The bad news is that with this interest in financial protection, concern and need, the study found that only about half of surveyed Gen Y workers have income protected with disability insurance. Among those that do have coverage, two out of five aren't sure how much income is protected.


Education in the workplace

While the MetLife study found that one in two Gen Y employees lack confidence in their ability to make the right financial decisions, approximately two-thirds are seeking advice and guidance from a variety of sources on their personal financial matters. However, very few (only 25%) have calculated their income protection needs in the event of a health issue. What do these findings mean? This generation may be more receptive than others in utilizing workplace financial education programs, online tools, and other resources to obtain the right amount of protection for their needs.

Consider the following statistics: About one-third of employees overall say that their employer doesn't offer an online tool like a disability insurance calculator. Whether their employers truly don't offer these tools or simply are not effectively promoting them, this area can be an easy fix that makes a big difference - more than half (53%) of employees who used an online disability tool found it very effective in helping them determine how much coverage they needed. The survey found that more than half (51%) of Gen Y employees strongly value having more education programs in the workplace that cover individual finances and retirement planning.


Access to additional coverage

About seven out of 10 employers provide some level of disability coverage to their employees, according to the study, but that basic level is probably not going to be enough to meet the needs of many Gen Y workers. A big reason is the percentage of income they are spending simply on meeting essential expenses. The MetLife study found that almost half of Gen Y workers are spending 70% or more of their monthly take-home pay on essential expenses and one-fourth are spending 80% or more. An opportunity to obtain additional coverage on a voluntary basis can be key for making sure that coverage amounts are adequate, and the study found that 56% of Gen Y employees are interested in having their employer provide a wider array of voluntary benefits they can choose to purchase.

Your clients might also be underestimating the power of leveraging non-medical benefits offerings to help drive employee loyalty - which is now at a seven-year low, according to the study. One in three people would like to work for a different employer in 2012, but that number climbs to one in two for Gen Y employees.

Here's a disconnect: 51% of employees said that non-medical benefits like dental, disability, and life insurance were strong influences of their feelings of loyalty toward their employer, but only 32% of employers thought so. This divide is also problematic because the study highlights a correlation between benefits satisfaction and loyalty. For instance, 61% of employees who are very satisfied with their benefits say they feel a very strong sense of loyalty to their employer, compared to 24% of employees who are very dissatisfied with benefits.

Employee benefits can help strengthen the relationship between employers and younger workers, since 63% of Gen Y workers say that benefits are an important reason why they stay at their job. Offer opportunities to strengthen a personal financial safety net through the strategic use of voluntary benefits.

Taylor is vice president, group disability for MetLife.

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