Voluntary long-term disability (VLTD) sales have increased each year since 2011, consistently representing between 6 and 7 percent of total sales. Employer demand for VLTD continues to rise and is one of the top ten most frequently offered products, with 18 percent of employers offering VLTD in a recent 2018 study.
Increased demand necessitates flexibility in plan designs and disability timeframes as well as liberal underwriting guidelines to encourage participation, finds Eastbridge’s new report, Voluntary Long-Term Disability Plans 2019, covering in detail 18 VLTD plans sold in the voluntary/worksite market today. To achieve liberal underwriting while managing risk, most carriers surveyed offer guaranteed issue underwriting during the initial enrollment period and allow coverage increases during open enrollment periods with a new pre-existing conditional requirement, but without underwriting. Carriers are also reducing elimination periods, offering more liberal disability definitions with lower income loss requirements, and adding various riders to cover different types of continuation. Rehabilitation benefits/incentives and support services for employers and employees are also offered by many.
Encouraging employee participation remains a key challenge for carriers marketing VLTD plans, with only around 40 percent of employees owning long-term disability coverage, according to Eastbridge research. To improve participation, carriers are enhancing and simplifying their employee-facing product and enrollment material, and adapting their educational approach for increasing utilization of self-service enrollment environments. They are also ensuring that employees have some level of choice in the enrollment process, even though most options still remain at the employer level. Employee choice of benefit amount or buying less than the amount for which they are eligible are commonly offered, as are a few additional types of choice.
Voluntary Long-Term Disability Plans 2019, a Spotlight™ Report
Eastbridge Consulting Group, Inc. is a marketing advisory firm serving insurance and financial services organizations in the United States and Canada.