SHELTON, Conn., May 10, 2019 (GLOBE NEWSWIRE) -- Americans are continually urged to be aware of risks ranging from dangerous weather to health threats to looming deadlines for filing tax returns. May is Disability Insurance Awareness Month, but is this annual reminder really necessary? After all, many people who are able to do so take steps to protect themselves, including obtaining life, health and home-owners insurance. Who needs to be reminded of the need for more protection?
Some 50 million of us, according to Fred Schott, Director of Operations with the Council of Disability Awareness, who undertook some arduous research to reach that estimate. Over his career Mr. Schott has become familiar with every aspect of disability coverage, ranging from employer-provided and individually purchased plans to Social Security Disability Insurance (SSDI), and workmen’s compensation. Below are a few of his observations in a recent interview.
Q) Do those 50 million people lacking disability coverage have options?
A) People in that situation have limited options. An employer may offer sick days, but they rarely cover more than a week or two of time away from work; anything beyond that would require you to tap into your rainy-day fund—assuming you have one (and a lot of people don’t). And as for workers comp, remember: that only applies to injury or illness acquired in the workplace. The incidence rate for lost-time claims under workers comp is around one per hundred covered people. By contrast, non-occupational short-term disability has an incidence rate of around five per hundred.
Q) What about Social Security Disability Insurance (SSDI)?
A )There is a very high bar for qualifying for SSDI. Your disability has to keep you from earning just about anything, and it has to last at least a year (or be a terminal condition). Wait times after applying are quite long and often initial applications are turned down and an appeal is required.
Q) Why are so many people not covered for disability?
A) There are a number of factors. Disability coverage is obtained through different channels – as an employee benefit, through an association or affinity group, or on an individual basis. But the most common is through employers. Not all employers offer DI as a benefit, and in today’s tight labor market, employers need to understand that offering a robust benefits package (including DI) is a way to attract and retain great talent. Some employers offer DI on a voluntary basis, where the employees usually pay all of the cost. So, the employee needs to be sold on the value of purchasing the coverage. Yes, there’s an expense to the employee, but when he or she has a claim, benefits are tax-free, in contrast to employer-paid DI, where benefit amounts are taxed. So, in the end, at a time when it counts most, employees will have more money in their pockets.
Q) Any changes or improvements you have seen in people’s awareness about DI over your career?
The younger cohort of workers—the Millennials and now Gen Z—are much more outspoken about wanting an employer who cares about their well-being. And employers who offer DI benefits—as well as robust family caregiving leave benefits—will definitely resonate with the younger cohort (which is now becoming the largest one in the workforce). Another trend is more efforts to increase financial literacy. Learning the basics: budgeting, money management and saving are all part of the equation of identifying risk and then protecting oneself and one’s family. And DI is clearly recognized as a part of building a personal safety net. But the challenge of getting people to move from awareness to concrete action still remains.
Q) What else might spur interest in DI as a benefit?
A) As I mentioned, the booming job market and a very low unemployment rate. Many employers are in an intense hunt for workers. An attractive benefits package, including DI, can be an important recruitment tool for companies. Also, Millennial interest in becoming entrepreneurs can eventually lead to the need for income protection for those who are successful.
Sufficient Coverage and a Plan
Insufficient disability coverage can be a problem, especially for trained professionals. Marcello De Pascale, AIF®, a Financial Planner at Barnum, had a highly skilled registered nurse as a client. “Her serious back problems were complicated by an injury and surgery before she became a client. She had thought the disability coverage from her employer at 60% of salary was sufficient, but it fell well short of bringing her close to the level of income she had previously,” Marcello notes. “Ultimately, after two years, the payment was reviewed, and it was deemed she could work in an administrative capacity. She lost the entire amount she had been receiving.”
Jeremy Hus, Vice President of Financial Planning at Barnum, explains that lack of disability coverage can undermine goals such as a secure retirement or educating children. “Many people think of protecting their families with life insurance, but far fewer review disability income insurance or assume they’re covered at work,” he observes. “What they may not realize is that there is a much higher probability of becoming disabled during their working years than passing away. It is essential to review all coverages and see how they integrate with the financial plan.”
For further information contact: Patrick Connor, Public Relations, pconnor1@barnumfg.com
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Barnum Financial Group provides a full range of investment and risk management products and services to over 250,000 clients, including individuals and their families, as well as small businesses, corporations, government entities, and not-for-profit organizations and their employees in all fifty states. With offices in Connecticut, Massachusetts, New Jersey, New York, and Rhode Island, Barnum has resources to help create customized solutions to fit your goals and circumstances.