Special Report: Insurance Indecision on Group Life and Disability Insurance (March 2015)

Roy Tuscany was 24 when he broke his back after he overshot a 100-foot ski jump by 30 feet.

Two weeks prior to his life-altering accident in 2006, he could have signed up for disability insurance. Like many young adults his age, he shrugged it off, thinking it wasn’t necessary. After all, he was a Sugar Bowl ski coach in Norden, California. Coaches don’t get into accidents, right?

“I had just signed up for health insurance, and I remember thinking that it was already a burden to pay for that,” Tuscany said.

Tuscany, who now has limited use of his legs and walks with “a monster limp,” said he didn’t know how much disability insurance would have cost him at the time and didn’t understand why a young guy like himself would need it.

Disability Disconnect

Workers aren’t the only ones confused by what group disability insurance can do. Human resources executives might be missing key ways to help employees with disabilities be more productive, a new survey from The Standard Insurance Co. shows.

More than three-quarters of the 300 managers surveyed said they have an employee with a disabling condition, and nearly half said they weren’t sure how to make reasonable adjustments for that person.

“Many managers we surveyed are contacting their legal department or another professional organization first for information,” said Brian Kost, director of The Standard’s Workplace Possibilities program. “These managers are strapped for time, noting they can only spend about eight hours a month helping with employee disabilities.”

About half of the survey respondents said they didn’t know that disability carriers often have recommendations or can offer research help. Respondents also weren’t sure of costs involved in making adjustments at work. About a quarter thought costs would be $1,000. Some simple, inexpensive adjustments can include modifying work schedules or providing appropriate technology.

“The average reasonable accommodation costs far less than what most people think,” Kost said.

—Patty Kujawa

“Knowing what I know now, I would’ve told myself that my lifestyle almost requires disability insurance,” he said.

And the cost?

“It would’ve been worth skipping buying a 12-pack of beer” to pay for it each month, Tuscany said.

While most Americans faithfully get insurance for their home, their car and their medical expenses, not everyone takes care of what may be most important: their lives and their jobs. Many workers say the reason they don’t have these types of insurance is because they don’t understand the costs and the benefits to having them.

Over the past few years, the industry has seen lackluster results in boosting participation in group life and disability plans. On top of this, more companies are having workers “volunteer” or actively sign up and pay for all types of benefits — from retirement to dental to life and disability. It can be an overwhelming decision process at enrollment time, so many group disability and life insurance providers are retooling communications and hoping for better results.

“Everyone is trying to see what works and which strategies are more effective,” said Kimberly Landry an analyst at LIMRA, an association of insurance and financial services companies that used to be known as the Life Insurance Marketing and Research Association. “We’re in an experimental phase right now.”

Houston, We Have a Problem

Only 68 percent of full-time workers purchase group life insurance, and just 53 percent participate in group disability, according to LIMRA.

“There is a lot more responsibility for employees to take on,” Landry said. “Employees don’t spend a lot of time thinking about this.”

When it comes to disability, most people just don’t understand it, said Carol Harnett, who is president of the Council for Disability Awareness, a nonprofit organization based in Portland, Maine. In its “2014 Disability Awareness Study,” 67 percent of respondents said their income was important, but less than a third said they were willing to insure or protect it.

Harnett said providers unsuccessfully tried for years to scare workers into signing up for disability insurance. She wants to call it income insurance because, for many people, disabilityinsurance is about taking care of short periods when they are out of work, like maternity leave or recovering from an accident.

“I don’t think we’ve told stories that people can relate to. We need to change how we’ve had this conversation,” Harnett said. “When we talk about being out of work, we’ve tended to lead with fear and statistics, and people don’t usually cozy up to that.”

Two Trends Merging

Industry experts recognize two dynamics hitting the workforce and affecting how group life and disability products are being communicated. First, millennials are projected to become the largest living generation this year, with 75.3 million people ages 18 to 34. The Pew Research Center reports there will be 74.9 million baby boomers (ages 51 to 69) this year, while Generation X is expected to outnumber boomers in 2028 with 65.8 million.

Millennials “are becoming a rising force in the purchasing behavior of our products,” said Laura Marzi, vice president of group benefits marketing for The Hartford Insurance Co.

Next, employers are passing the benefit purchasing decision on to workers. With health care costs driving many company benefit budgets, employers are still opting to make benefits available, but are laying the cost on employees. More than half of employers currently or plan to offer benefits this way compared with 32 percent in 2012, research from The Prudential Insurance Company of America shows.

“Because of this shift, employers are understanding the importance of educating

their workforce,” said Ketty Trivedi, director of product and marketing for Prudential Group Insurance. “It will help employees make more informed decisions.”

So What’s Different?

Providers realize certain parts of the workforce like baby boomers, women and others like to receive information differently, but the largest segment — millennials — are driving the new communication trends.

“We fully recognize that the individual employee is now making [the benefit] choice and that they receive and understand information in a variety of ways,” said Tom Dupuis, vice president of product and market development for Unum Group. “It’s about framing things better so they can put it into context and make informed decisions.”

Today, workers at most large companies are getting messages from a variety of outlets including email, group meetings, mail at home and individual one-on-one meetings. Since millennals are social media junkies, providers are starting to put their messages out on social media sites such as Facebook, LinkedIn, Twitter and YouTube.

And while millennials are leading the way on social sites, all demographic groups have bumped their digital usage. It might not be a one-size-fits-all message, but going digital with communications is a critical strategy, experts agree.

“We are at a tipping point, and I think the next 18 months are going to show us that digital and mobile applications are going to drive decision-making,” Hartford’s Marzi said.

Last September during Life Insurance Awareness Month, MetLife Inc. created a series of videos called “Who I Live For,” which were launched exclusively through social media. The series used people from a range of backgrounds ages and genders. People gave pretty similar answers, but each person told his or her storyindividually, pulling photos from smartphones or writing on dry-erase boards. 

“Rather than promoting the need for life insurance, this was more about protecting and providing for the ones you live for,” said Stephen Pontecorvo, MetLifesenior vice president. “It was a softer touch on the conversation about life insurance.”

MetLife reported that the campaign got more attention than any other campaign it has run outside of Super Bowl ads, with more than 354,000 video views, 146,000 tweets and several news stories.

Getting people to warm up to products like life and disability well before enrollment season is critical, Hartford’s Marzi said. There are several ways to connect during the offseason, including life events like getting married, having a baby or divorce. These moments trigger educational pieces that must be clear, accessible and easy.

One of The Hartford’s learning pieces is an interactive video called My Tomorrow,

where folksy guitar music and a friendly female voice guide users through informational sessions asking for personal information to craft a tailored educational experience.

“The way we designed it was very intentional,” Marzi said. “We tried to use graphics that were consumer- or retail-oriented. We wanted you to be entertained.

“As an industry, we are going to become more comfortable with digital interaction like this because it offers so many more ways to customize the experience for users,” Marzi added.

Getting a retail experience while learning about or signing up for life or disability insurance is becoming critical, industry experts agreed. Just like shopping on Amazon.com, providers are using testimonials just like multistarred product reviews, to give workers a better understanding of how the insuranceapplies to their lives.

“Part of the reason people shy away from life insurance is because there’s an apprehension of the unknown,” Pontecorvo said. “Just having someone tell their story and what’s involved helps relieve a lot of apprehension.”

Prudential’s Trivedi said many employers want to bump all forms of communication — not just digital. Prudential data show 74 percent of employers say group meetings are the most successful way to communicate benefits; 72 percent say one-on-one meetings are best.

Digital “is important, but I don’t think the marketplace is ready to say we’re moving to all digital,” Trivedi said.

Still, The Hartford has seen some success with new digital strategies Marzi said. In its 2014 “Benefits for Tomorrow Study,” the Hartford reported 85 percent of respondents in 2013 signed up for group life insurance compared with 83 percent in 2010. Long-term group disability participation saw a slight jump to 66 percent from 65 percent during the same time frame. Short-term group disability sign-ups decreased in 2013 to 69 percent from 73 percent in 2010.

Unum’s Dupuis agreed that gauging success will take time. Meeting workers with compelling messages in ways that they want to receive the information — whether electronically or face-to-face — is key.

“It’s not an overnight movement, but one we feel we are making progress on,” Dupuis said. “We have work to do in terms of making connections for employers and employees.”

Tuscany, for one, has made that connection — unfortunately by accident.