Our evolving economic environment has made many of us reassess our personal financial preparedness. For some, this reassessment may involve checking for potential gaps within their insurance coverage. One coverage that is often overlooked, but could fill the gap as well as encourage financial preparedness, is disability insurance. In this episode, Lincoln’s, Dr. David Berube, Chief Medical Officer for Group Protection, and Tony Stevens, Assistant Vice President of Disability Insurance Products, to talk about:
AM-LADFP-AUD001 5/23 Z01 LCN-5703738-052423
© 2023 Lincoln National Corporation. All rights reserved.
Our evolving economic environment has made many of us reassess our personal financial preparedness. For some, this reassessment may involve checking for potential gaps within their insurance coverage. One coverage that is often overlooked, but could fill the gap as well as encourage financial preparedness, is disability insurance. In this episode, Lincoln’s, Dr. David Berube, Chief Medical Officer for Group Protection, and Tony Stevens, Assistant Vice President of Disability Insurance Products, to talk about:
AM-LADFP-AUD001 5/23 Z01 LCN-5703738-052423
© 2023 Lincoln National Corporation. All rights reserved.
Hello again, listeners. This is Chris Takesian Marketing Manager for leave and disability at Lincoln Financial. Our evolving economic environment, as a result of COVID-19 has made us reassess our personal financial preparedness, like never before. For some, this reassessment may trickle down to insurance coverage to check for potential gaps. One coverage that may help with the idea of financial preparedness, but is often overlooked is disability insurance. Joining me today to discuss the benefits of this product are two of my colleagues at Lincoln Financial, Dr. David Berube Chief Medical Officer for group protection and Tony Stevens, Assistant Vice President of Disability insurance products. I appreciate you both for joining me today.
Tony Stevens:Thanks for having us.
Dr. David Berube:Yes. Thank you.
Chris Takesian:Jumping right in when thinking about disability insurance, why do you think it is often overlooked when selecting benefits?
Dr. David Berube:Yeah, this is David. I can go first. I think it's difficult for many people to plan for, I guess what I'd call it the unexpected. Right. Um, and especially when today's priorities are, you know, what we live, we live today. We live tomorrow, but we don't necessarily live for next month and year. And, and a lot of our finances are based on what we can pay for now. And many people are healthy, right? So they may not anticipate becoming disabled. That's going to generally happen to someone else, or that's what we think. Um, we may not realize the risk of financial hardship that often we think happens to others. And we don't necessarily plan to have months and weeks of, uh, you know, money in the bank as well. Uh, the fact is that about one in three people will have a disabling experience in their working career. Uh, that may be as little as a few weeks, uh, or maybe many, many months. And, uh, that's when the challenge really comes upon people, because at that point it's difficult to pay the rent, the mortgage, the car payment, you know, and other things like that.
Chris Takesian:Absolutely. And from a claims perspective, uh, for both short and long-term disability, people might not know what, what falls under these categories. Can you talk about what types of claims we typically see with these products?
Dr. David Berube:Yeah, absolutely. So short-term disability insurance generally covers conditions that would be an acute injury or illness that may last just a few months, a most common disability claim in the short term disability, uh, arena is pregnancy. Uh, you know, so a few weeks, uh, perhaps, uh, to recover from delivering a child. And, um, most commonly, uh, outside of pregnancy is going to be musculoskeletal injuries, right? Slips and falls, things of that nature, as well as, uh, mental health challenges. Uh, occasionally some cancers will occur that are, uh, not very serious and, and need a short term, you know, to recover. Similarly the long- term disability is going to be the more chronic and serious conditions. Typically they may be something like back pain, which requires surgery or a cancer, which may require surgery and chemotherapy to recover. So things like that, um, the majority of the conditions we don't plan for outside of pregnancy, and that's the challenge, uh, to be prepared in a time with some benefits, uh, available to us when it's unexpected.
Chris Takesian:It's the unknown that can be hard to plan for. And I think something we hear a lot is, but what about health insurance? Would that provide the safety net that someone needs, where if they were to experience a disability?
Dr. David Berube:I would say typically, no. Health insurance won't pay the bills from the perspective of the non-healthcare related bills. And when someone has a long-term illness, they need to continue to pay their mortgage car payment and so on. And the other thing that, that people don't realize today, and this is, you know, something that came upon us, uh, in the past several years is many health insurance plans have a high deductible requirement, as well as co-insurance. So even though someone has great health insurance, they may still be required to pay the first say$3,000 for their health care. And that money has to be either taking out of the bank or, um, you know, be available in some other fashion, uh, such as from, uh, disability insurance or other plans that might provide some benefits.
Tony Stevens:Yeah. I think that's a great point that you know, that the healthcare costs themselves will likely drain the resources from a financial perspective. And so how are people going to pay for the mortgage, everything to pay your rent, how are they going to pay the electricity bill? That's really where the need for disability comes in.
Chris Takesian:Yeah. And are there trends we're seeing, so if something like that happens, you know, how are these people paying for this? What, what risk factors are they falling into when they might not have that coverage in place?
Tony Stevens:Yeah. You know, unfortunately, you know, about 40% of us households have only, you know,$6,000 in liquid savings. And so unfortunately what they have to do is actually potentially tap into the retirement funds, you know, going into the 401k, they may incur penalties if they do an early withdrawal, but not only that, you know, they're potentially robbing Peter to pay Paul because they're taking from their future to pay for the here and now. And so, you know, what will they do in the future because they don't have those savings.
Chris Takesian:Right. And especially given our kind of current economic situation, those, uh, you know, either personal savings or retirement accounts could already be in jeopardy of being at risk, uh, with people having to use those funds for other needs right now. You know, one benefit associated with disability insurance is really the financial preparedness that it can bring someone. Can you talk about the importance of disability coverage from this perspective?
Tony Stevens:Yeah. You know, it's all about the unknown. We talked about being prepared for the unknown and that, you know, if you think about it right now, people are out of work and, you know, looking for income while disability may not necessarily fill that role directly, you know, it will show the role if they become injured, what if they get into a car accident? You know, disability insurance provides that income so that, you know, while they're not working, they have money to pay the bills and all their expenses.
Chris Takesian:And you know, what aspects of these products, um, from a claims perspective, uh, can they, can they serve as income replacement?
Tony Stevens:Absolutely. And, you know, that's the core of the design of the product. You know, Disability insurance provides people with a predefined portion of their earnings, you know, typically 50 to 60%. And these benefits are paid directly to the employee, just like they would in the procedures, you know, uh, their payroll from their employer.
Chris Takesian:And then, you know, if I'm assessing my personal needs, are there key indicators that someone may want to think about to say, okay, I think disability insurance may be right for me. Are there, are there things that people should be saying, okay, I hit those factors. Maybe I should, uh, look into disability insurance.
Tony Stevens:Absolutely. You know, it's a pretty basic question of, you know, what happens if I become disabled and I can't work for some period of time, what will I do? You know, you have to think about what you have in your checking or savings account. You have to think about what are the other resources that you have, you know, are you willing, or even able to put things on a credit card to kind of help pay for certain things. And so really assessing your own financial preparedness. I think it's a strong way to determine whether you need disability insurance with that said, even those people that feel financially secure should really consider long- term disability because, you know, it's one thing that you can survive for six months and you have the savings for that. But what if you're disabled and unable to work ever again? You know, what if that's 10, 20, 30 years, what would you do in that situation? And that's where long-term disability really comes into play. And this very useful.
Chris Takesian:Are there any other benefits with these products set that the listeners may be, should be aware of?
Tony Stevens:Yeah. Most policies have additional features that support the employees as they're dealing with their disability. It may be something is, you know, providing additional funds and services to help get the employee back to work. For example, it may pay for vocational rehab services to help the employee get trained, to work differently, or potentially even work in a different job.
Chris Takesian:Switching to the employer side of the topic, relaying the importance of disability insurance, I think should be a top priority based on what we talked about today. Are there ways that employers can educate their employees on this coverage?
Dr. David Berube:Oh yeah. Certainly if, if, um, you know, I may add here, you know, no one wants to take a step back, uh, in, in their life and employers want to make sure they can continue moving the business forward. Um, so from a financial perspective, there's, there's value for both parties, the employee and the employer to collaborate here. And, um, you know, the, the main goal is, is for the employer to provide a benefit to maintain the workforce, keep things going and for the employee to, uh, continue working. So I think from a collaborative standpoint, uh, there's a lot of value in both of them focusing on these types of benefits.
Tony Stevens:Yeah. I would add that, you know, part of this is, is education. You know, it's one thing to offer the coverage, but I think it's another thing to really educate your employees on what this coverage is. Again, most people really don't think about this disability on a day-to-day basis. And so they see it, they, they don't understand it so they don't buy it.
Chris Takesian:Yeah, I think that makes perfect sense. Um, and what about self service? Are there ways that our listeners can engage with their employer about disability coverage?
Dr. David Berube:There certainly are. You know, I think what a lot of employers do and, and, and also employees from the standpoint of even volunteering, um, there's a lot of activities and celebrations and, and awareness events. So if you think about, you know, every month of the year, there are typically organizations that are focusing on certain needs. So for example, um, you know, January with new year's resolutions, there's generally a focus on weight loss efforts. Uh, February there may be focused on heart disease. A world cancer day occurs in February and, and those types of events go on throughout the year. And I think both employees and employers can celebrate those events together. And at the same time, have some education and awareness, uh, many volunteer to assist individuals with disabilities. There's a lot of rebuilding that goes on into, uh, you know, different locations. We may have had disasters and I think incorporating the benefits and the, uh, the financial and payment issues, uh, that go along with healthcare, uh, and disability are really something that both can focus on together with those types of events.
Tony Stevens:Yeah, I would add to that, that most insurance companies provide a ton of great marketing collateral that employers can use with their employees to understand what benefits they have, but also how to use the benefits. And I think, you know, partnering with the disability insurance company to really understand, is it digital? Is it paper, what's the best way to engage with employees to create that education?
Chris Takesian:Yeah. And going off that as well, I'm sure employers have that data on their side, you know, how best to reach out to my employees. So it's really, like you said, finding those avenues where they can best connect with their employees and making it effective, um, to really get across the importance of this coverage. I think through this conversation alone, uh, you know, I myself might want to go back and reassess my own needs, especially coming off of a disability insurance awareness month in May. So we've, we've talked about a lot here and just wondering if there are any final takeaways you want to leave our audience with?
Dr. David Berube:You mentioned a disability awareness month in may and so on. And I think one of the key learnings is that, um, we need to realize we have a one in three chance of having, uh, or greater a serious disability event during a worklife. And we can prevent that, you know, healthy diet, a healthy exercise and all these great things that we can do will add up and reduce our chances of having a disability event, some adverse health problems, uh, in the future. Um, so I think that's critically important and staying focused on our health while at the same time being focused on our financial health and wellness and being prepared for the unexpected.
Tony Stevens:And I would just say increase education and dialogue, can really help demystify disability insurance. Can be confusing to employees. You know, this really insurance is an affordable way to protect your finances at a time when employees need to focus on their health on top of removing the worry and stress of how to pay bills, the coverage provides resources to help employees get back to work.
Chris Takesian:That's great. And I just really want to thank you both so much for, for joining me today. Uh, I, I really appreciate your time.
Dr. David Berube:Well thank you.
Tony Stevens:Thank you.
Chris Takesian:To everyone listening, thank you for joining us. We will continue to cover topics that help employers and their employees to this new environment. So be sure to subscribe to Lincoln Absence Advisor on Apple, Spotify, or wherever you get your podcasts.
Disclosure:The information contained in this podcast is for general use and is not a substitute for the advice of an attorney or your human resource professional. Lincoln Financial Group is the marketing name for Lincoln national corporation and its affiliates. Affiliates are separately responsible for their own financial and contractual obligations.