Employers Offer LTD, Doubt Speedy Return

May 9, 2003 (PLANSPONSOR.com) - Long-term disability (LTD) insurance is valued by employers who have it, but the majority does not view it as a way to speed an employee's return to work.

Most employers (86%) recognize a need to provide benefits in addition to health insurance in order to attract and retain good employees, with 60% of those who purchase disability insurance saying they did so to accomplish that end. Further, nearly nine out 10 employers who offer disability insurance to their workers say they would recommend it those who do not, according to a study conducted by the Health Insurance Association of America (HIAA) and JHA Inc.

Most offering the coverage (86%) said they offer the coverage because they understand that workers’ compensation will not provide adequate coverage to their disabled workers. However, less than a third of all employers view disability insurance as a way to speed a disabled employee’s return to work, and fewer than one in 10 of those who offer disability insurance say they purchase long-term coverage to accomplish that goal. Further, employers are not sure whether workers appreciate the need for additional disability insurance, with 41% of those responding indicating their employees do understand the need for disability insurance, while only 34% said their employees do not understand it.

Financial planners also recognize the value of adding disability insurance. The survey found that 77% of all financial planners agreed that disability insurance is necessary to secure a client’s financial well being, with 16% suggesting the purchase of supplemental disability insurance even when the client’s employer already provides some coverage.

Not surprisingly, the higher the client’s income, the more likely the financial planner is to recommend the purchase of individual disability insurance. Two-thirds of the planners surveyed want more flexibility in designing a disability program, and 82% said they want a disability insurance product that is easier to understand.

Full survey results may be purchased for $85 from HIAA’s Center for Disability and Long Term Care Insurance by calling 1-866-872-3434, or on the web at http://www.hiaa.org/store/bookstore .