April 2 is National Employee Benefits Day. LIMRA research finds that many employees don’t understand key features of some of their benefits. When it comes to life insurance, only 56 percent of workers realize that money from a life insurance claim can be used for anything – including paying off education debt. Less than half realize the coverage they purchase at work is often portable, meaning they can keep it if they change jobs. Employees also tend to significantly underestimate their risk of needing life insurance before retirement age.
LIMRA research also shows that fewer than 2 in 3 workers understand what disability insurance is, while just 43 percent realize that short-term disability insurance is often used to provide paid leave after routine childbirth.
Similarly, there is also confusion around critical illness insurance. Just a quarter of employees understand that critical illness insurance pays out a lump sum that can be used for anything upon diagnosis, not just medical expenses. Only 7 percent can correctly identify the conditions that are most likely to be covered by critical illness insurance – heart attack, cancer and stroke.
Employers and carriers have an opportunity to improve employees’ knowledge about their worksite benefits. Employees who have a greater understanding of the financial risks they face and the products, such as life insurance, disability insurance or critical illness insurance that can help them mitigate those risks are more likely to sign up for the coverage. Read our latest infographics on employee knowledge of life insurance, disability insurance and critical illness insurance for more information.
Data is from a LIMRA survey of over 2,000 employees conducted in December 2017.