May is Disability Awareness Month

DI: Going Beyond Financial Protection

Looking over the often over-looked emotional & psychological safety nets

by Greg Breter

Mr. Breter is senior vice president, Unum Benefits Organization. Connect with him by e-mail: gbreter@unum.com

For many people, disability insurance is a lifeline when an illness or accident leaves them unable to work with the resulting loss of income. By replacing up to 60 percent of an individual’s income, disability insurance often helps employees avert financial hardship. But disability insurance actually offers those who have it much more than just financial protection. The benefits of this coverage offer emotional and psychological support, as well, which is one reason why this coverage is so important for all employees.

Some facts

In a recent survey, 77 percent of Americans reported that they would suffer great or moderate financial hardship if they were unable to work for three months. This isn’t surprising given that three in four workers also report they live paycheck to paycheck at least some of the time, and more than half of Americans have less than $10,000 in savings. These facts are particularly troubling because the average group long-term disability claim lasts more than 34 months, often longer.

Most claims specialists know that early intervention is the key to helping employees return to work as soon as they are able. In fact, after six months, only 50 percent of claimants are likely to return to work, and after a year, only 25 percent return to work. As a result, when employees face an extended disability absence, they experience not only financial concerns, but social, psychological and health issues related to not working, as well.

The good news is that disability insurance benefits can help address all these concerns, including barriers to return to work, which enables claimants to resume a normal lifestyle.

A range of non-financial issues

The non-financial issues that disability claimants must deal with are many and varied, and are often associated with loss. For instance, recent consumer research reveals that claimants on disability frequently experience a loss of identity. With an individual’s identity today closely tied to one’s job, a claimant’s sense of self worth is often diminished when he or she is no longer working. Closely related is the loss of status, because an employee’s title and where he or she works strongly define the individual.

These losses are often compounded by a claimant’s loss of structure, since work life provides routines and predictable daily activities. Loss of structure can lead to a sense of isolation, with claimants separated from the support network they previously relied on at work along with the social connections they enjoyed with their co-workers.

For many claimants, most devastating is the loss of control they experience. Many describe a feeling of helplessness, with their disabling condition determining their life. One woman in her 40s put it this way: “Without the benefit payment, I would have felt dependent, where I don’t have control of my life, trapped, child-like.”

Many claimants also experience a sense of fear, closely tied to the loss of control, because the future seems so uncertain. Some said financial instability led them to wonder how they would make ends meet. Said one married man in his 20s, “We would have struggled financially …I would have felt awful, scared and stressed.”

Compounding the problem is the shame and guilt many claimants feel when they can no longer provide for their families. Thanks to their disability insurance, however, 78 percent of survey respondents said the benefits helped them maintain their self-esteem as a provider for their family. One married man said he “…would have felt anger, shame, disappointment, the entire range of negative emotion,” if not for his disability payments.

Another concern for employees on disability is the impact on their family, especially their children. Claimants are particularly sensitive to how children will react to seeing them experience many of the emotions described above. Psychologists have observed that the stress of unemployment can lead to declines in individual and family well being, and can also affect outcomes for children. These concerns are real, as exemplified by the fact that 85 percent of the beneficiaries in the survey with children had to cut back on savings and/or activities for them.

Looking at the long term

It’s clear from the survey that when a disability claim goes beyond six months, claimants become fatalistic and subject to depression. They begin to feel as if there is nothing they can do to change the situation and they must live with it. And although a claim may initially begin with a physical illness, over time co-morbidity may occur as the psychological issues become equally as difficult to deal with. It’s no wonder only half of all beneficiaries are able to return to work at this point.

As one single woman in her 50s remarked, “I probably would have gone off the deep end. My whole life was working. I think it [disability insurance] probably saved my mental health as well. It would have been too much to bear with the health problems I have.”

The non-financial benefits of disability insurance cannot be overemphasized. In fact, 88 percent of claimants in the survey said that their disability benefits helped them maintain a healthy emotional outlook, while 68 percent said their health would have been worse without benefits.
While almost all benefits recipients admitted to experiencing considerable sacrifices in their lifestyle due to reduced income, long-term disability benefits clearly help mitigate many of the negative impacts. For example, forty-four percent believed that without their benefits, they would no longer have been able to afford to stay in their home. Although 23 percent acknowledged that they missed a mortgage or rent payment, an additional 49 percent said they would have missed payments if not receiving disability benefits.

Disability Insurance: A Reality Check

Two-thirds of working Americans think injuries, not illnesses, keep employees from working for at least three months. However, the reality is that the large majority of all disability claims are for illnesses and health conditions. That means the odds of an individual missing work due to a disability are great. In fact, one in four of today’s 20-year olds will become disabled before they reach the age of 67.

The bad news is that the Bureau of Labor Statistics reports that only one-third of U.S. workers today have access to employer-sponsored long-term disability coverage at work, and fewer than 40 percent have access to short-term disability insurance. The good news is that 86 percent of workers indicate they would be willing to pay half of a $30 per month insurance premium. And more than half (56 percent) said they would even be willing to pay the entire $30 premium to gain disability protection.

Financial difficulties resulting from a disability absence are well documented. Now it’s apparent that the non-financial impact is equally devastating. In fact, one study indicated that “unemployed workers are twice as likely as their employed counterparts to experience psychological problems such as depression, anxiety, psychosomatic symptoms, low subjective well-being and poor self esteem.”

Clearly, employer-provided insurance represents an important part of the social safety net that American workers need today. One benefits recipient summed it up this way: “I feel that it is important for any and all employers to offer this [insurance] to their employees. One second can change your life. You can go hungry or lose your house. I think it is extremely important.”

[1] Consumer Federation of America, and Unum, Employee Knowledge and Attitudes About Employer-Provided Disability Insurance (2012).

[1] CareerBuilder.com, “Percentage of U.S. Workers Living Paycheck to Paycheck Reaches Recession-Era Low, Finds CareerBuilder Survey (Aug. 15, 2012; accessed July 3, 2013).

[1] U.S. Senate Committee on Health, Education , Labor & Pensions, The Retirement Crisis and a Plan to Solve It (2012).

[1] Gen Re, US Group Disability Rate & Risk Management Survey (2012) (based on claims closed in 2011).

[1] “Returning injured employees to work,” Professional Safety, 53(6), 63-68. Bose, H.A. (2008).

[1] Press Release, “New Report from CFA and Unum Reveals Critical Role of Workplace Disability Benefits,” September 23, 2013.