There is general agreement that the economic reality of global aging, both for governments and individuals, will result in more people working longer due to financial necessity, creating new market opportunities for both disability and long-term care insurance.
“Short-term injuries and illnesses that put people out of work will be more prevalent,” says Kristen Tugman, senior director of Health and Productivity at Unum, a major provider of disability insurance. “And an older worker just doesn’t recover as quickly as someone under the age of 40.”
Tugman says only an estimated 30% of the U.S. population has private disability insurance, meaning there is “a huge untapped market.”
For employees suffering an unexpected injury or disability during their working age, existing healthcare coverage provides few resources aimed at helping them return to work.
“We want to do whatever we can do to collaborate with them and their employer to help them return to productivity,” Tugman says.
Most of the disability insurance now being sold is offered through the workplace as an employee benefit, and Tugman says that remains the best option.
“Any benefit that is delivered through the employer organization tends to be the best avenue in terms of allowing an employee to understand what those benefits are. We certainly encourage employers to provide that benefit for their employees because it is a win-win situation—it benefits the employee and also benefits the employer by getting a worker with knowledge of the job back to work,” she says.
But even when employers offer disability insurance, employees often are not aware of the need for the coverage.
“We talk a lot about life insurance, but you are much more likely to experience a disabling event [during your working years] than you are to die,” she says.
Tugman says there are numerous short-term and long-term disability products available. “But we haven’t anticipated all the products that will be necessary for the new population, products to fill gaps that we haven’t anticipated,” she says. “We will need disability products that extend well beyond the age of 65 into the 70s. And there is a percentage of the American population that says it will never retire, so definitely there will be products that we need and will need to design.”
Advances in healthcare may be allowing people to work and live longer, but in many instances, living longer does not mean living healthier. Death rates from so-called adult diseases, such as heart attacks and cancer, may be falling due to better treatment and prevention. But more people are suffering from diseases that affect their ability to live independently, including Alzheimer’s, dementia and Parkinson’s, thus the greater need for in-home care, nursing homes and assisted living facilities.
Medicare does not provide long-term care coverage, and Medicaid coverage is available only when someone has exhausted all of his assets, but long-term care coverage can offer a financial lifeline.
Dr. Bruce Margolis, medical director of Genworth, the leading provider of long-term care insurance, says 8 million to 9 million Americans have some kind of long-term care coverage. Although some employers provide group coverage, most long-term care insurance is purchased on an individual basis.
“Traditional disability is meant as income replacement if you can’t perform your job,” Margolis says. “Long-term care is for personal care if you become functionally disabled.”
He says Genworth is seeing an increased interest from employers in offering long-term care insurance as an employee benefit.
“From our perspective, there is a significant untapped need,” Margolis says. “Up to 70% of people will need some sort of long-term care in their lifetime. This will help you mitigate that personal risk.”