Mitigating Insurance Risks: Identifying Your Needs Pyramid

The growing need for ancillary benefits among workers.

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By: Peter Brown

The growing need for ancillary benefits among workers.

When it comes to insurance benefits, understanding what you need today and in the future is a difficult chore. While healthcare benefits are viewed as an essential aspect of life, preparing for potential income loss due to long-term disability or preserving your assets for living family members isn’t always a top priority among workers. Are you putting enough money into retirement savings and health savings accounts (HSAs)? How can you leverage your resources into other products to preserve your assets?

For technology workers, weighing these options is an important task regardless of whether they are millennials straight out of college, Generation Xers at the mid-point of their careers or baby boomers in or facing retirement. However, despite what may seem to be different needs for different populations, there is an appropriate insurance option for every stage of life.

The Needs Pyramid (Figure 1) focuses on what technology workers should be aware of in terms of insurance benefits and what they may or may not be getting from their employers. Beyond healthcare, products such as term life insurance, disability income insurance, professional liability insurance and dental may be necessary to meet one’s security needs.

While disability or life insurance may not be a top priority for a millennial’s Needs Pyramid, workers in the middle of their careers may consider this to be as equally important as basic healthcare.

“We are starting to see a need or a desire for more ancillary products such as dental and long term disability insurance become more a focus for tech workers,” says Graham Fuller, Principal and Senior Relationship Manager for Mercer, the IEEE Member Group Insurance Program Administrator.

Budget-conscious consumers may view insurance as a commodity and seek the least expensive option. However, many savvy shoppers are also looking at the total value of an insurance product, including some newer flexible features and riders.

As such, more features are available with policies today, such as living benefits in a life insurance plan, consultative services or access to bundled products. For example, IEEE’s Professional Liability insurance choice program may include a complimentary review of the consulting contract or a free risk management course. Long-term care insurance, bonded with life insurance or annuity products have entered the market to help consumers leverage their payment stream to cover both important needs.

Life insurance, dental, accidental death and dismemberment, disability and business insurance should all be included on any tech worker’s Needs Pyramid, regardless of demographic. According to Fuller, some are starting to get it.

“When a person passes away, it doesn’t mean that mortgages are forgiven, that college loans aren’t to be paid and it doesn’t mean that final medical bills aren’t going to need to be paid,” said Fuller. “This is where products like term life insurance are really important to consider and frankly, a lot of people don’t think of this. However, awareness is slowly increasing and improving.”

Mercer sees year-over-year increases in the purchase of term life insurance products among millennials as they have larger student loans and know that these obligations are not going away.

Disability and long-term care insurance needs are also changing because they are becoming increasingly necessary but at the same time are very expensive. The benefits marketplace is evolving to try to help people afford the cost of long-term disability or an unexpected tragedy. What do you do when a worker or loved one is hit with a long-term disease or issue in their early 40s and is looking at 25 years or more of having to pay for that disease?

While disability insurance is known to most, the reasons that workers go on disability are quite different than what people expect. It is not when someone falls down or throws their back out that is cause for most claims. Instead, according to resource website Disabilitycanhappen.org, 90 percent of disabilities are caused by issues such as cancer, heart attack, diabetes, arthritis and mental illness, not accidents.

And this doesn’t just affect older generations. According to Disabilitycanhappen.org, 25 percent of today’s 20-somethings will become disabled before they retire. That’s a huge percentage of a growing portion of the workforce that will be impacted.

Identifying your own Needs Pyramid and what you specifically want from your benefits is something each individual needs to accomplish regardless of demographic and IEEE-sponsored Insurance Services can help you sort it out. For more information visit: https://www.ieee.org/membership_services/membership/discounts/group_insurance.html

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