What lies ahead in private disability insurance?
Disability insurance is making headlines lately. A recent podcast of Chicago's National Public Radio affiliate's "This American Life" highlighted the growing number of Americans receiving federal disability compensation. According to the report, the number has almost doubled in the last 15 years to 14 million Americans. It surmises that lack of education and the culture in particular sections of the country, including the disability law industry, have affected the numbers.
In April, The Wall Street Journal looked at the difference between federal and private long-term disability insurance. While only 0.5% of government disability recipients return to work, nearly 20% of private LTD workers do. So with a greater success rate than the government and nearly 100 million American workers not on private disability insurance, according to the Council for Disability Awareness, what lies ahead for this voluntary product?
"There's a coverage gap when it comes to disability, and educating is going to be important," says Andrew Sullivan, SVP of disability and small market business at Prudential Group Insurance. He adds that awareness of the likelihood of disability and the availability of disability insurance will become increasingly popular as "more employers shift to 100% voluntary."
Sullivan says there's a lot of potential for brokers with disability products. "The disability plans will try to fill some of the gaps that are created [by health reform] and brokers will need to know how to give the best advice and sell the product."
Alex Dumont, AVP of product marketing at The Standard Insurance Company, says the trend toward disability becoming a cost-share between employers and employees or to a completely employee-paid benefit "depends on the quality of the enrollment support that's provided." She adds: "For sure, the industry has seen challenges in getting people enrolled."
One solution, Dumont says, at least in getting the younger generation of Americans enrolled, is to shorten voluntary lifespans. Let them "choose or pick how long they want to be eligible, say for two years instead of until age 65."
Eric Reisenwitz, SVP of market solutions at Lincoln Financial Group, says there aren't really new DI products right now, but there are growing connections between voluntary plans that could creatively sell disability-like coverage. "Especially younger people who don't think they're going to get sick or have any accidents happen to them. The mixture of a high-deductible health plan and a solid critical illness plan could be as good of cover as they may have had prior to any of the health care reform initiatives coming into play," he says.
Reisenwitz continues, "Employers are looking for more reports and analysis on productivity and wellness programs. You'll see a lot more from employers asking what they can do to actually prevent disabilities."
The Standard's Dumont adds that there might even be fall-out from the Affordable Care Act that could impact disability and other voluntary products that industry insiders have yet to imagine. For now, she says, "leverage your experience, choose your insurance partner that is able to show value and at the same time leverage cost overall."