Seventy-one percent of companies surveyed said that group long-term disability insurance is extremely or very important. The study by Mass Mutual and The American College also reveals that many companies have shortfalls in their plan designs. On average, only 60% of employees’ base salary is covered by a group long-term disability insurance program. Only 27% of group long-term disability insurance programs include variable compensation — leaving bonus and commission income unprotected.
The majority of group plans offer a basic foundation of coverage, but limit benefits for high earners. Surprisingly, just one-quarter of companies are considering making changes to their group long-term disability insurance program.
Tara Reynolds, cor
porate vice president for MassMutual said, “It’s a real travesty that employees are being left exposed when they don’t need to be and when they may not be aware of it. While group long-term disability programs provide strong foundational coverage, they may not meet the needs of all employees and they do not cover all sources of employment income.” The opportunity to purchase buy-up coverage through a group long-term disability insurance program is not widespread, with only 25% of employers offering this option to some or all employees. Only 15% of companies surveyed offer individual disability income insurance to supplement their group plan. Cost and administrative burden were cited as reasons why companies do not offer individual disability income insurance coverage, along with the option that employees can purchase it on their own outside of work.
The study points out that individual disability income insurance can provide consumers with portable protection. Employ
ees who purchase individual coverage through the workplace get discounted premiums and simplified underwriting. For increased protection, employees can select riders for catastrophic coverage or retirement contribution protection. For more information, visit www.massmutual.com/DIstudy.
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