HALF OF GEN Y WORKERS SURVEYED LACK DISABILITY INSURANCE
NEW YORK, NY, May 04, 2012
Approximately two-thirds of surveyed Gen Y workers ages 21 to 31 are very concerned about their family's financial security if the principle wage earner is unable to earn an income due to illness or injury, which may not be surprising given that nearly half this demographic admit they are living paycheck-to-paycheck. However, the situation is even more precarious because only about half of Gen Y workers surveyed say they have any income protected with disability insurance, according to research collected for MetLife’s 10th Annual Study of Employee Benefits Trends.
“A disability is not selective – it can happen to anyone, at any time. If you have people who depend on your income — or if you depend on your income — you need disability insurance. MetLife research finds that Gen Y workers are shouldering significant familial responsibilities: 55% say they are married or in a domestic partnership, 46% are parents of young children, and 13% provide care for an elderly parent or relative,” said Clea Barth, vice president, Individual Disability Insurance for MetLife. “These obligations underscore the importance of understanding how disability insurance can help build a financial safety net so that essential expenses could still be paid if the breadwinner is unable to work due to illness or injury.”
Almost one in four of today’s 20-year-olds will become disabled before reaching age 67, according to a 2012 Social Security Fact Sheet. It's less expensive to get disability insurance when you’re young and healthy. Even among those Gen Y workers who do have coverage, there is a need to ensure that coverage amounts are adequate. Among those surveyed for the MetLife study that do have disability insurance, 40% are not sure what percentage of their income is covered.
A good rule of thumb is to buy enough disability insurance to protect 60% - 80% of after-tax income to cover essential monthly expenses, yet it is important to do a personal needs assessment. MetLife research found that almost half of Gen Y workers say they spend 70% or more of their monthly take home pay on essential expenses and one-fourth are spending 80% or more.
Getting Started
About seven in ten employers offer some type of disability insurance coverage, according to the MetLife research, and, as a first step, employees are encouraged to learn what is available through the workplace.
“Take advantage of benefits and educational resources offered in the workplace. If disability insurance coverage is nonexistent or not enough consider supplementing this coverage with an individual disability income policy,” adds Barth. “The important thing is to take the time now to find out how much coverage is needed. Only about one in four Gen Y employees surveyed say they have calculated how much is needed to protect against income loss due to a health problem.”
In addition, Barth suggests the following:
- Perform an annual review – Conducting an annual financial review that incorporates all insurance policies can uncover any gaps in coverage. Since a year can bring significant changes—marriage, children and home ownership among them— it is important for employees to make adjustments in coverage options that accurately cover each of their life stages.
- Ask for advice – MetLife research found that only about half (53%) of Gen Y workers surveyed feel very confident in their ability to make the right financial decisions. Whether people prefer talking with a financial advisor or performing research on their own, there are a number of options available to help them make the best choices for their individual situation. Some employers offer financial planning as part of a voluntary benefits package or financial wellness plan. Workers can also take advantage of numerous online calculators to help determine if they have the proper levels of coverage.