Financial planners use disability insurance with their clients on a regular basis to help mitigate risks with their financial goals. Employees of financial planning firms should also have the opportunity to understand and use disability insurance in their financial planning and savings.
A previous blog, “Developing or Changing Your Benefits Plan”, talked about the importance of tying the benefits you offer your employees to match the culture and vision of your practice.
A recent Sun Life Financial Survey of over 2000 US workers suggests that a significant proportion of American workers do not understand the likelihood of having a disability and the resulting potential financial consequences.
Offering disability insurance as a benefit for employees should be a “natural” for financial planning firm employers. There are several options to investigate, even if your firm has only one employee.
Communication and Education is a first step:
- The study by Sun Life shows that many people are not aware of the financial impact of a disability, and that planning firms should be educating their employees on the benefits of the appropriate amount of disability insurance – dependent upon the employee’s situation.
Locating Disability Plans:
- Some states, such as California, Hawaii, New York, New Jersey, and Rhode Island, already have a state-mandated temporary disability insurance program in place. These programs are typically funded through payroll deductions from employees and/or contributions from employers. Check to see if your state offers such a program.
- Consulting a group benefits provider is an excellent way to find out what disability programs are available.
- AFLAC, among other companies, offer supplemental policies for employees to participate in at their own expense.
- If you are member of an association, organization, society or other group, you may have access to group benefits. The Financial Planning Association offers members the opportunity to apply and pay for disability insurance – subject to meeting certain conditions and an application process. You may be able to offer employees the benefit of membership in one of these associations, organizations or societies. You can also choose offer to contribute towards the cost of the premiums.
Whatever is decided, make sure you have a written plan in place (signed by the employer and employee) specifying what is covered and how the additional premium funds may be used.
This is just an overview. This article is for informative purposes only and is not to be construed as legal advice. You need to consult your experts, such as insurance broker/ provider, human resource consultant, attorney, to be aware of federal, local and state regulations and exceptions.
Mary Dunlap, CFP®
Mary Dunlap Consulting