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Health InsuranceMost of the public's attention has been focused on the Affordable Care Act's impact on health insurance — particularly on hospitals, physicians, insurance exchanges and myriad compliance requirements. But independent agents should also be mindful of a related peril and the developments that are taking place in its name: disability.

Last week, the Council for Disability Awareness (CDA) released its ninth annual Long-Term Disability Claims Review, an exclusive analysis of long-term disability claims data and trends from 19 of America's top disability insurance companies.

The study reports that disability claims payments in 2013 totaled $9.8 billion — a 1.6% increase since 2012. It also finds that although more employers (214,000) offered long-term disability benefit plans in 2013 than in 2012, the number of insured individuals fell 1% to 32.1 million.

Since the number of companies offering disability benefit plans increased between 2012 and 2013, the decline in insured individuals may reflect a movement toward more voluntary/employee-paid disability benefit plans, in which not all eligible employees choose to participate. Research supports the trend: The 2014 Aflac Workforces Report found that last year, 22% of companies eliminated or cut back on employee benefits; 14% reduced the number of major medical plan options; and 56% increased employee copayments or employee premium share.

Unfortunately, many young people harbor the misconception that they don't need disability insurance. They're wrong—statistically speaking, people in their 20s are five times more likely to become disabled than they are to die. And since the benefit period is potentially much longer — 30-40 years or more, in some cases — the aggregate value of the coverage is much more valuable for a 25-year-old than a 65-year-old: Someone whose benefit is $40,000 annually for 30 years would yield $1.2 million in total benefits paid. Some disability plans will even make a contribution to the insured's 401(k) plan in the event of disability.

As an independent agent, you're well-positioned to initiate a conversation with your employee benefits clients to make sure they not only are aware of the need for disability protection, but also have looked into a variety of options that could provide the right level of protection for them and their employees.

The 2014 Long Term Disability Claims Review also reports that:
  • Of the 150,000 new disability claimants approved by CDA member companies in 2013, more than half (56%) were women.
  • In 2013, the average claimant age exceeded 50 for the first time ever. Claims for insureds more than 50 years old — mostly driven by claimants over the age of 60 — have been consistently increasing as a percentage of the total, reflecting the aging of America’s working population. But more than four in 10 new claimants were in their 40s or younger.
  • Musculoskeletal system/connective tissue disorders remain the leading cause of new disability claims, followed by cancer, injuries, cardiovascular/circulatory disorders and mental disorders.
Contact TCU Insurance Agency at (800) 773-8043 for all your disability insurance needs.

(Article courtesy: IA Magazine from Independent Insurance Agents & Brokers of America)
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