Why Disability Insurance Should Be Part of Your Paid Leave Strategy
Benefits are becoming a key differentiator in the job market. A 2017 report by the Society for Human Resource Management (SHRM) reports that nearly one third of organizations increased their benefit offerings over the past 12 months. The leading reason? To remain competitive in the talent marketplace.
Amid all the benefits being offered today, from pet insurance to unlimited time off, disability insurance remains one of the most critical forms of protection that employers can offer. Disability insurance protects someone’s ability to earn an income should illness or injury arise. At a time when emergency savings are shrinking and medical costs are rising, that safety net is becoming vital to an employee’s financial wellness.
Here are five reasons to consider offering this benefit to your workforce:
It’s the foundation of your employees’ financial security.
Without income protection the effects of not having an income become very real, very fast. An employee may not be able to pay their mortgage, their phone bill or contribute to their health insurance or retirement plans should a pregnancy, illness, or injury take them out of work for a few weeks or more.
Without it, the effects can be devastating.
By offering disability insurance, employers can avoid having the heartbreaking conversation about what to do after paid leave or sick leave ends (if it is even available). A 2017 CareerBuilder survey showed that nearly eight out of ten Americans are living paycheck to paycheck. Data from the Federal Reserve in 2016 showed that nearly half of consumers said they couldn’t pay an unexpected $400 bill without having to take out a loan or sell something.
It retains talent.
Not only does short- and long-term disability insurance help people feel more secure in their jobs, your employees are also more likely to return to work if they have this coverage. SHRM estimates that replacing an employee can cost 60 percent of their annual salary — so retention has a major impact on the bottom line.
Data from the Bureau of Labor Statistics shows the average cost of providing both long-term and short-term disability coverage in 2016 was approximately 10 cents per hours worked, or $205 per year. In contrast, the average employer contribution to health insurance averaged $2.86 per hour worked, or $5,725 per year.
It’s a family-friendly benefit.
Short-term plans typically cover two weeks before and six weeks after a routine pregnancy. Unless you’re one of the few employers who offer paid family leave, disability insurance is a critical financial benefit for women in the workforce.
To learn more about how disability insurance works, visit www.RealityCheckup.org