The Science of Aging Well: How Your Beliefs Affect Your Health
Director, Enrollment & Account Management
Guardian Life Insurance Company of America®
Editor’s Note: Employers can help employees better prepare for their future and help close potential income gaps caused by longer-term workplace absences by providing supplemental income protection. This benefit provides additional coverage benefits from a protection perspective and also enhances employee recruitment and retention strategies.
In today’s world, employees look to their employer for more than just the basics like health and life insurance. They also look for other necessary benefits, such as additional income protection. Having a strong benefits strategy can be fundamental in the way employers compete for top talent — and supplemental income protection is an important consideration. Even more, in the new era of remote work and pandemic life, employees especially look for ease of participation in these benefits through digital channels.
Group long-term disability coverage can be an essential foundation for your employees. But group LTD offered through an employer may not provide enough income replacement in the event of an illness or injury. Therefore, offering additional options such as supplemental income protection (or multi-life individual disability income insurance) is important.
Potential for Underinsurance: The Income Gap
The potential for underinsurance for employees and key executives is real. Consider the facts:
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- Three out of five people say their savings would last only six months if they became unable to work due to illness or injury.1
- The duration of an average group long-term disability claim is 34.6 months2
- Almost 90 percent of long-term disabilities are caused by illnesses not injury3
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As compensation increases for your employees, coverage gaps (or income gaps) can occur and the result can be underinsurance that impacts an individual’s ability to replace an adequate amount of income. Income gaps occur for several reasons, key amongst them being that:
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- group coverage typically replaces only 40 to 60 percent of before-tax salary.
- benefit caps may leave higher-earning employees with the lowest income replacement ratio, and
- taxes on employer-paid coverage can reduce benefits significantly.
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This leads to possible “reverse discrimination” or “benefit portfolio inequity” for your higher earning employees.
Also keep in mind that group LTD may not cover incentive and bonus compensation and may not include protection for retirement contributions or student loans. Group LTD is also not portable, meaning if the employee were to leave his or her job, the existing policy would no longer provide disability income protection for the employee. Luckily, supplemental income protection can help employees avoid benefit inequity, inconsistencies in coverage, and underinsurance situations.
The Solution: Supplemental income protection
You can help your employees better prepare for their future and help close potential income gaps by providing supplemental income protection. This benefit is two-fold: the additional coverage benefits the employee from a protection perspective, and it can also benefit your company in terms of recruiting and retention.
What’s more is that by offering supplemental income protection, employees obtain coverage through a simplified process known as guaranteed standard issue. This only requires the employee to answer a few basic questions, without the need for medical or financial underwriting. Some providers even offer the ability to enable coverage to grow with the employee’s income during the annual review process.
When considering which insurance provider to offer this supplemental benefit to your employees, consider one that can help you customize a benefits package with a breadth of options that also accommodates your high-income, high-value employees, and other employee segments that speak to the demographics of your organization. In addition, look for multiple funding options to meet your objectives such as voluntary, employer-paid, and cost sharing options/executive carve-out, and an array of billing options to fit your administrative needs.
Enrollment fundamentals and strategies
Employees would be most satisfied with a new benefit offering when they clearly understand its value and how it applies to their situation. They also appreciate a quick and easy experience that is customized for their needs. Insurance can be complicated, and employees may not understand the value of the product. To overcome this challenge, work with a provider who has a strong educational approach with a customized digital experience that is tailored to the demographics and culture of your company so employees can feel confident in their decision.
Seek out online enrollment strategies that provide an interactive and engaging experience with educational tools to help employees calculate their lifestyle-related expenses to make an informed decision on the need for additional coverage. You should look for a carrier that provides flexible strategies that “move with” enrollment activity – these are designed to engage and drive the employee to action. For insurance providers that offer a strong customized digital experience, enrollment and policy issue can take place in a matter of minutes, offering a seamless application process. Make sure that the carrier you choose provides first-class enrollment and ongoing account management support that always puts you and your employees first.
Ensuring every enrollment encompasses favorable case attributes and the right level of commitment is critical when it comes to positioning your organization for success.
Though every program has its individual characteristics, high employee satisfaction and successful enrollments always begin with the employer’s commitment. Here are some ways that you can help position your program for success:
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- Partner to build an enrollment strategy that focuses on education and engagement and leverages your corporate culture
- Allow sufficient lead time to develop the enrollment strategy
- Support enrollment communication strategies developed based on best practices and your corporate culture
- Grant access to employees through home mailings, email and one-on-one phone consultations
- Designate key internal resources, such as a Human Resource Manager, Billing contact, IT contact
- Advocate for the program and/or identify a key center of influence who can help advocate for the program
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Employees may have differing levels of trust regarding their company’s benefit offering because they don’t understand the value of the product. Therefore, finding a company with a strong customized educational approach is crucial. By clearly informing employees of their current income protection levels and providing the tools to help them calculate their lifestyle-related expenses, employees can make an informed decision concerning their need for additional coverage.
Supplemental Income Protection is a Win/Win
The bottom line is this: employees look to their employer to offer a benefits package that can provide added protection in the event of an illness or injury. By offering supplemental income protection, you can add value to your benefits portfolio – and also provide a competitive advantage for your company.
1 Mind, Body, and Wallet” Guardian 4th Annual Workplace Benefit Study, 2016
2 Council for Disability Awareness, Chances of Disability, http://disabilitycanhappen.org/overview/, accessed September 2021
3 Integrated Benefits Institute, 2018 Health and Productivity Benchmarking, Long-Term Disability
Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.
Individual disability income products underwritten and issued by Berkshire Life Insurance Company of America (BLICOA), Pittsfield, MA or provided by Guardian. BLICOA is a wholly owned stock subsidiary of and administrator for the Guardian Life Insurance Company of America (Guardian), New York, NY. Product provisions and availability may vary by state.
GUARDIAN® and the Guardian Logo® are registered trademarks of The Guardian Life Insurance Company of America.
©Copyright 2021 The Guardian Life Insurance Company of America, New York, N.Y.
2021-127580 (Exp. 09/23)
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