OVERCONFIDENCE usually is something we see from a boxer right before he gets flattened or from a know-it-all investor before he loses it all ("I've got this great Internet start-up"). Apparently, the affliction stretches to consumers who receive group products through an employer. A Guardian Life Insurance Co. survey reveals that 70 percent of employees questioned believe they know the difference between group and individual life coverage, but nearly 50 percent think a medical exam is required for group coverage.
A big reason for such misinformation and overconfidence may be that people spend just over one hour a year reviewing their benefits choices. In contrast, the average respondent will spend almost five hours on Christmas shopping (and that's probably someone with a small family).
The survey, "Benefits and Behavior: Spotlight on Group Life and Disability Insurance," found that knowledge of disability insurance is not widespread. Nearly one-fourth of respondents believe group disability insurance is more expensive than individual policies, when most group policies are less expensive. Thirty-five percent don't know how much employer sponsored disability coverage they have, and 27 percent of those who have disability coverage don't know what percentage of their income is protected.
Perhaps most disturbing for benefits professionals is that statistic that shows 48 percent of respondents don't know that employer-paid disability coverage is taxable. Brokers can play a role in improving that number.
"It is disturbing that nearly half of U.S. employees do not realize that Uncle Sam may take away a portion of their disability check," said Craig Guiffre, vice president, Group Life and Disability at Guardian. "This can be a shock to an employee who is trying to recover and survive on a reduced income."
Employees consulted several sources of information before making their choices:
Literature provided by employers -- 50 percent
Talking to human resources or the personnel department -- 42 percent
Meeting with benefit advisors -- 36 percent
Discussing with family members -- 45 percent
For more information, visit www.guardianlife.com. To see Guardian's dental spotlight survey, visit
www.guardiandental.com.
