Most Small Employers Offering LTD Think It Is Beneficial

According to a survey released by the Consumer Federation of America and Unum, employers understand the value of long-term-disability (LTD) insurance for their employees. And those who offer it believe it serves the interests of their company.  Employers not offering LTD are more likely to overestimate its cost, underestimate the desire of employees for the product, and have difficulty in managing disabled employees and their absences.

“In general, group disability insurance serves the interests of small employers and their employees,” noted Stephen Brobeck, CFA’s Executive Director. “By making this insurance available, employers help protect the personal income needed by consumers,” he added.

“The ability to earn a living–our income–is the most valuable asset we have, and protecting that asset is increasingly important,” said Richard P. McKenney, president and CEO of Unum. “Small employers can play a significant role in helping their employees insure against some very real risks to their financial stability.”

Employers overwhelmingly disagree that “most employees have enough savings to cover normal living expenses if they become unable to work due to illness or injury.” And only a small minority of all respondents (13%) believes that Social Security and workers’ compensation “will cover most of a worker’s income if they become injured or ill.”

The benefits of LTD

Thus, it is not surprising that a large percent of employers believe that most (60% or more) of their employees would face significant financial hardship, like home foreclosure or bankruptcy, if they were disabled and unable to work for at least six months.” Moreover, 86% of those interviewed agree that it is important “for employees to have long-term disability to protect them financially if they became disabled.”

However, according to LIMRA, less than half of employers with 10-99 employees offered LTD insurance in 2014.  And based on the current survey results, less than half of these small employers have a policy for handling employee absences due to a serious illness or injury.

Reasons for not offering LTD

Many employers without LTD cited employee resistance. When asked why their company did not offer LTD, about two-thirds indicated that “the cost is too high for employees” and more than half (57%) said that “not enough employees will enroll.” Many (40%) said that “employees would not value or appreciate the benefit.” Yet, a survey conducted in 2012 found that 86% of U.S. workers would choose to have disability insurance, even if they had to pay some of the cost for it.

While 6 in 10 employers without LTD cite cost to the employer as a major reason for not offering it, many of these employers also admit that they are not knowledgeable about what the monthly premiums would be.

In fact, the survey reveals that employers without LTD probably overestimate the cost of providing the benefit.  Although 42% of employers without LTD thought that the benefit would cost $30 or more per worker, a considerably lower percentage (30%) of employers that offer the benefit indicated that the premium was $30/month or more per worker. Based on industry data, the typical range for LTD premium per month in employer- sponsored programs is $20-$30.

Employers with LTD believe that LTD serves the interests of their employees.  A large majority says that employees value and appreciate the benefit and eight in 10 believe that offering LTD is “what a responsible employer does.”

But they also believe it is not just the employees that benefit from this coverage: 82% report that attracting and retaining employees is a reason for offering LTD and more than half (55%) say they offer it in order to reduce company costs if an employee goes out on disability. Half of them say that offering LTD improves productivity and “gets employees back to work faster.”

The online survey of benefits decision-makers was conducted by Greenwald & Associates on behalf of CFA and Unum in April 2015. A total of 504 benefits decision-makers at companies with 10-99 employees participated in the survey. Additional information is available at

Ayo Mseka