A number of trends-from product and enrollment enhancements to an aging workforce, and even the Affordable Care Act-are affecting the voluntary disability insurance arena. Agents and brokers who understand the trends and can demonstrate to employers and employees the value of the product can find opportunities to increase revenue and retention.

According to Kathy Plummer, director of product and market development at Unum, "A number of carriers, including traditional group carriers and standard voluntary benefits providers, offer voluntary disability." Some companies, including hers, have introduced new products or new features. Relatively newer, she says, are enhanced enrollment methods and the use of exchanges and other partnerships.

The continued shifting of costs from employer to employees is another trend, says Mike Estep, second vice president and head of group life, disability and supplemental health products at Guardian Life Insurance Company of America. "Part of this includes employers looking at benefit exchanges as a way to offer employees more choice in benefits selection," he explains. "However, choices are not only important in an exchange platform, but also make a difference in a traditional voluntary sale, particularly when it comes to younger employees."

Alexandra Dumont, assistant vice president of product development for Sun Life, also sees cost shifting. "The Affordable Care Act continues to impact employers, and we're seeing the continued trend of employers shifting the costs of benefits onto employees. Benefits like disability are now becoming voluntary, which calls for better employee education-on disability and all voluntary benefits."

"One thing that continues to grow is the use of guaranteed issue coverage that allows the highest number of eligible employees to qualify for coverage," says David Polen, director of product and market development at Colonial Life. "Employers want to know that their employees will qualify for coverage."

Dumont adds, "Baby Boomers are entering retirement age, although many are still working well into their sixties. By 2020, the workforce will include five generations, so employers are looking for disability products that will be meaningful for their employee population. We see the need for further product development in order to service the multiple generations."

Targeting growth
According to Polen, "The need for disability insurance for employees remains, despite the tendency of employers to reduce their overall employee benefits spend. This expense move opens opportunities for voluntary disability coverage-a growing market-and agents and brokers can help fill gaps by understanding and bringing voluntary options to the table."

Estep points to data from the third annual Guardian Workplace Benefits Study that says "early entrant" employees-those in the first five years of working-are much less likely to have disability income insurance compared to employees who have been working longer and are nearing retirement. "Younger employees tend to have less to spend," he explains, "so providing voluntary options, where they can decide what they need and what they can afford, may make it easier for them to participate."

"Millennials continue to be the demographic that is least likely to purchase disability benefits," says Dumont, "but they're just as likely to need it-particularly short-term disability-as other demographics." She points out that the shift toward employee cost sharing means that employees are also now responsible for learning about disability insurance and what package is right for them.

She adds, "Millennials are less familiar with the product, unless they know someone who was on disability, or experienced it themselves, and they sometimes lack the innovative educational tools they need to make informed benefits decisions."

Plummer stresses that all segments of the workforce should be looking at voluntary disability plans. "They allow for some level of employee choice in the benefit amounts and offer flexibility in terms of funding methods and plan designs," she notes.

She encourages brokers and agents to educate themselves on the various plans and offerings. "And then introduce them to clients as a way to provide employees a higher degree of financial protection and to allow the company to create a better benefit package," she says. "It also, of course, will help boost agency or brokerage revenue."

Reaching the boss
Making the case to employers is an important early step in the process. "One thing brokers can do is help employers understand the true cost of employee absence," says Dumont. "Absences can result in annual costs equal to 4% of the employer's payroll."

She also points out that disability insurance provides employees the time they need to take if they're ill or otherwise injured. "This can decrease issues around what's called 'presenteeism'-poor job performance due to working while sick or impaired," she adds.

Estep concurs. "Employers typically underestimate the cost of a disability at the workplace and don't fully recognize how it can impact productivity and affect their bottom line," he explains. "Agents or brokers should start with the basics, discussing not only how disability insurance can help protect employees, but also how it can help employers manage absences and encourage them to get back to work."

Aside from offering income protection, he adds, "Most disability plans provide valuable tools to help employees return to productive work. For instance, worksite modifications, vocational rehabilitation and occupational rehabilitation are standard in most contracts."

Polen points out that the disability insurance value proposition is straightforward. "It replaces a portion of income if someone is disabled and can't work," he notes. "Since most of America's workers live without a strong financial safety net, disability insurance can provide that cushion when someone needs it the most."

He says agents and brokers should explain to employers that, by offering disability insurance to employees, they're providing access to a benefit employees want. "Plus, they're providing access to an important benefit that will offer income protection that employees need to pay their bills," Polen adds. "It's a win-win."

Estep acknowledges that disability income insurance can be complex and intimidating, and not all agents or brokers may feel comfortable or have the time to discuss the benefits with employers. That's a poor excuse. "A comprehensive disability program-whether employer-paid, contributory or voluntary-is an important part of any employer's benefits package," he explains.

According to Plummer, employees give high priority to their income, but protecting that income takes on a lower priority. She says, "Most employees-more than 80%, according to America's Health Insurance Plans-look for their employer to provide access to this type of protection, but only half or less than half actually provide it in their benefits package."

She says the employer perception that the coverage is too expensive to offer is sometimes reinforced by brokers and agents who don't present coverage options to employers. "Agents and brokers should identify firms that lack disability coverage or exclude some employees from eligibility, and then present viable plan options and rates," she advises. "Explain the low relative cost of the coverage and the important role employers play in providing access to it."

Dumont points out that brokers can work with partners that help employers manage their benefits plan and provide disability solutions that help keep costs down.

Employee talk
Getting employers to make disability income insurance available is one step. Getting employees to buy is another. "A strong communication strategy with one-on-one benefit counseling is key," says Polen. "Employees have unique needs, and it's imperative that agents and brokers communicate the value of disability insurance at a personal level."

Dumont encourages agents and brokers to make sure that employee education tools are dynamic and innovative enough to appeal to every age group and demographic. "Also, statistics show that employees trust their employers most in terms of making benefits decisions," she explains. "Brokers need to make sure that employers understand their role and how powerful that role can be in terms of advocating for employee participation."

Just because products are voluntary, she adds, doesn't mean they should be kept at arm's length. "People don't always think about protecting their income when it comes to purchasing voluntary benefits," she says, "so it's important to have strategies and plans to educate, to continue to educate, and to look for unique and different ways to keep educating employees."

Estep also sees education as paramount. "Considering that government sources say about two-thirds of working Americans have no savings earmarked for emergencies, employees should be encouraged to protect their most valuable asset-their ability to earn an income," he explains. "Education is necessary, as most employees do not think they are at risk of suffering from a disability, particularly younger employees."

He points to Social Security Administration data that show that one in four workers now in their twenties will be disabled before they retire. "Our third annual Guardian Workplace Benefits Study shows that only a third of employers say tailoring benefits communications to different employee segments is a highly important goal," Estep adds. An even smaller percentage-13%-provide the tailored approach employees need, he says.

"For brokers and agents with clients offering voluntary disability, there's certainly an opportunity to help make benefits communications more relevant for employees at different work stages, like early entrants, so they better appreciate the protection available and its relevance to their current life situation," he notes.

Plummer says the most important role an agent or broker can play is to make sure that materials that accompany the offer to purchase show the importance of this type of coverage, the need for it, and its affordability, given the protection that it provides.

"Employees need to understand that their savings, Social Security Disability insurance or workers compensation coverage aren't viable solutions to the vast majority of disabling conditions that could keep them out of work-and without an income," she says. "Then they seek employers that provide this type of coverage and they'll buy, because purchasing it outside the work environment is very expensive and options are limited."

Parting counsel
Estep points out that one aspect often overlooked with disability insurance is that employees may have some coverage, but many are underinsured. "Many employers don't realize that the standard 60% of salary benefit and benefit maximums can end up leaving higher-paid employees or executives with a huge hole in their financial protection," he notes.

"These employees may think they'll be sufficiently covered if something happens because they don't actually do the calculations," he adds. "Then, when they suffer a disability, they're shocked at the actual benefit amount being paid." A voluntary supplemental income program layered over a traditional group long-term disability plan can help.

Plummer stresses that, given the flexibility available in the plan designs, various funding options, and solid educational materials and enrollment methods, every employer should be offering some type of disability coverage in its benefits portfolio. "With only a 37% penetration rate in terms of employees covered by disability plans, there's great opportunity to sell more disability coverage, increase the agents' or brokers' revenue stream, and provide access to millions of employees who need this type of coverage," she adds.

Finding a solid source for coverage also is important. "Brokers and agents can best serve their clients by partnering with the best benefits provider," Polen says. He recommends finding one with significant voluntary market experience and expertise "because it can be a complicated business. Work with an expert."

Also, he says, look for a proven track record of excellent service, a broad product portfolio, flexible enrollment options, and customizable benefits communication services. "Most important," Polen concludes, "select one that truly respects the vital relationship between agents and brokers and their clients."