Tag Archives: disability insurance

Digital Solution for Income Protection

New technologies mean disability income protection (IP) claims managers can enhance and expand the support and services they offer. Digital solutions can also be used to improve the claims experience.

TrackActive is a company that has developed an artificial intelligence-driven engagement platform that provides early, cost-effective and scalable interventions for rehabilitation and prevention of musculoskeletal conditions and other chronic disease. To find out more, I spoke with TrackActive co-founder and CEO Michael Levens.

RC: What drew you to the disability insurance business?

ML: We launched a product called TrackActive Pro. It links up patients with musculoskeletal conditions to clinics and physiotherapists. People using our service to support insurance claims suggested we go direct to insurers. They said it would reduce the friction they felt in making and processing their claims – the form filling and episodic, continuing interactions with the insurer. So, we developed a fully digital sister product called TrackActive Me.

RC: Have you encountered any challenges so far?

ML: Disability carriers don’t own the physiotherapist or the health professional; they just buy services from them. So how we get our product into the insurance value chain is very important. Insurers already have excellent claims management processes. However, these rely heavily on paper, which means we have to show that our digital offering can add value or even improve upon them.

RC: What are the benefits of TrackActive Me to the IP insurer and for the claimant?

ML: Engaging health professionals comes with a cost, and it’s continuing each time a claimant sits with one to process a claim. The quality and impact of the digitized version of our service compares very favorably; it’s as effective as going to see a health professional, and the prescribed exercises can be accessed on demand. The idea of a physiotherapist in your pocket that allows for remote monitoring is a stepping stone toward self-management. If things are working less than optimally, the user can easily opt in to seeing a health professional in person, via TrackActive Pro. Blending service and product like this is important.

See also: Putting Digital Health to Work  

RC: Must insurers think and act differently to use a digital tool?

ML: Yes, it can be difficult for insurers to visualize a digital version of an analogue process. For a start, TrackActive Me is very self-managed. While we have taken down an implementation barrier by making it simple for claimants to get and to use, we have removed some control of the process, too. Insurers can give the tool to their claimants, or a health professional can bring them on board after they have gone through their primary treatment.

RC: What is your message to IP insurers who are thinking about digital alternatives?

ML: It’s easy, really. We want to engage with companies willing to see that new digital process are not only capable but will enhance their offering. Companies that want to join the dots between the digital and the analogue. Those that have an open mind to technology and want to look at ways the current model can be enhanced.

The ideal working approach is collaboration to help the technologies of startups mature in ways that fit best with the needs of IP insurers, before plugging them into existing systems by using open application programming interfaces.

Technology will reduce the amount of manual work involved in assessing an IP claim. There are long-term benefits for insurers, as well, in the rich customer data that will be generated. Analysis of the data will provide predictive intelligence to help deliver better value and service to new claimants. It will help to anticipate claims and give focus to providing effective interventions. Ultimately, IP claims solutions delivered using AI or other digital means will save process costs that can then be passed on to customers in the form of reduced premiums. Meanwhile, a more frictionless and transparent solution to managing customers’ recovery in claim stages will significantly add to customers’ satisfaction.

10 Insurance Questions for 2017

Love it or hate it, 2016 was a year that brought many surprises. And 2017 is looking like another year of unexpected outcomes. The saying goes, “May you live in interesting times.” And we are definitely living in interesting times, including in the insurance industry.

Here are 10 insurance questions for 2017:

1. Will this be the year that the U.S. insurance industry makes a definitive move toward level commissions or fee-based products across all product lines?

Most other professional service providers are paid on an hourly or fee basis, including accountants, attorneys, physicians, trust officers and the majority of financial planners. The Department of Labor fiduciary rule is driving some insurance companies to offer fee-based annuities for retirement plans rather than traditional commission-based annuities. See my take on this: The Fiduciary Rule: A Call To Arms for the Insurance Bill of Rights: Aligning the Insurance Industry With Consumers. The U.K. already has a commission ban, yet life insurance sales are now trending up. While, there are differences in the U.S. and U.K. markets, the core principles are the same. To learn more, visit the Nerd’s Eye View Blog for Bob Veres’ in-depth look. Commissions are not necessarily the bottom-line issue; it’s the premiums that really make the difference.

2. Will the Affordable Care Act stay in effect? 

While no one knows for sure, it is unlikely that the ACA will be completely repealed any time soon. President-elect Trump, along with leaders in Congress, have vowed to repeal and replace, but doing so will be challenging given the lack of votes in the Senate. And while there are significant issues with the ACA, consumers do benefit. Also, healthcare organizations and insurance companies having spent millions of dollars to adjust to it. What is likely is that changes will occur on a gradual basis. The bottom line is that one of the most important benefits to U.S. citizens is the ability to purchase health insurance if you have any existing (or past) health issues. Prior to the ACA, it was challenging to get an individual health insurance policy, which created a bigger issue for individuals and for our overall society. Yes, premiums are increasing, and there are fewer insurers participating. At the same time, it is estimated that there are more than 20 million people with insurance under the ACA. Change will happen, just gradually. If the ACA is replaced, there remains the questions of how to fund it, if the current mandates (taxes and penalties) are stripped out. The funding is one of the core issues and does need to be revised. Insurance companies have also left the federal and state exchanges in a number of states, and they will need to be given incentives to return to the marketplaces.

See also: Top 10 Insurtech Trends for 2017  

3. What will happen with long-term care insurance (LTCI)?

The need for long-term care insurance is not going away; people are living longer, and healthcare costs are rising. Medicaid coverage is minimal and does not apply to most long-term-care expenses. Older LTCI policies have experienced significant premium increases for many reasons, but since the passage of the National Association of Insurance Commissioners’ Rate Stabilization Model Act, there have been fewer increases on newer policies (Read more: “What’s ahead for long term care insurance” ). Currently, hybrid long-term-care/life insurance policies are experiencing growth, but these complex policies are not a solution, as they are a step away from providing a direct protection against the specific risk being insured, which means they are more expensive than a stand-alone LTC policy. A new issue coming up is that some states have “filial responsibility” laws that obligate adult children to financially support their parents and are starting to be used by some nursing homes.  Read about it here.

4. Will insurance agents go extinct?

No, insurance agents will not be going away. However, the way that insurance agents currently do business and have historically done business will be going away. With greater access to information and technology, insurance agents will become true advisers to their clients rather than simply transacting product sales. Professional insurance agents provide value to consumers when they help them understand how insurance policies work and when they assist consumers in making wise choices. The insurance agents who survive will be the ones who recognize that they need to align their interests with those of consumers and work in their best interests by recommending insurance coverage that consistently meets the needs of their clients. Insurance agents will need to follow the concepts outlined in The Insurance Bill of Rights. Mark Twain said, “The reports of my death have been greatly exaggerated,” and this certainly applies to insurance agents.

5. Will consumers finally discover the value of disability insurance? 

Disability insurance is the most overlooked financial tool. Disability insurance is a necessity for anyone who depends on their income. If we are discussing a mandatory insurance coverage, disability insurance should be at the top of the list. Three in 10 workers entering the workforce today will become disabled for some period before they retire (Social Security Administration, Fact Sheet, January 31, 2017). This point was brought home by the fact that Colin Kaepernick did not play this year for the San Francisco 49ers until they purchased a disability insurance policy for him. Read more here.

6. Has the annuity marketplace hit its turning point? 

The current annuity marketplace is filled with complex annuity options that are increasingly challenging for an insurance agent to understand, let alone being understandable for consumers, especially seniors, who are heavily marketed to. The annuity industry continues to face significant market conduct issues in terms of suitability and disclosures (Read about the investigation by the New York Department of Financial Services). Annuity companies that think outside the box and provide low-cost, easy-to-understand solutions will gain popularity. A number of leaders in the financial planning area are already discussing the value of single-premium immediate annuities in investment portfolios to help offset longevity risk (living too long). This will only happen with low-cost annuities and where agents can really provide value by recognizing and solving challenges that can only be addressed with annuities that serve the consumer by getting back to the core function of annuities.

7. Have we reached the tipping point for when the impact of the prolonged low-interest-rate environment will fully emerge on interest-sensitive life insurance policies? 

The majority of universal life policies issued are facing the hidden danger of terminating long before they are expected to. This is due to lower-than-projected credited interest rates, which has led to reduced cash values. If a life insurance policy reaches a cash value of zero, it will terminate unless it has a no-lapse guarantee. The only way to keep the policies in force is to increase the premium, however, life insurance companies, for the most part, are not advising policy owners that they need to increase the premium and specifying the amount by which the premium needs to be increased. This situation has been exacerbated by the fact that a number of life insurance companies have had to increase their mortality costs (cost of insurance charges) to maintain profitability. Continuing to ignore this issue is going to have significant long-term ramifications for the stability and trust in life insurance companies and life insurance agents. This is affecting all types of life insurance that are not guaranteed products, just not as directly. Read more: Will Your Life Insurance Terminate Before You Do?

See also: 10 Predictions for Insurtech in 2017  

8. Is there truly an insurtech company that can add core value to the insurance process?

The insurance industry needs evolution, and not revolution. The majority of insurtech companies are really bringing us more of the same; they are really just “dressed up” insurance brokerages and insurance insurance companies. And while some do make use of technological breakthroughs, they are not making insurance breakthroughs, which is an important distinction. The real breakthroughs will come from when consumers can more easily understand insurance products and pricing and companies can use data to provide truly customized insurance product pricing, streamline underwriting, simplify products and riders and provide insurance products that people need, thereby eliminating those that don’t have a useful purpose.

9. Is it time for insurance policies to finally be used primarily for insurance purposes?

The insurance industry will recognize that it must get back to its core function, which is protecting against potential risks. When this happens, it will lead to better-optimized insurance products for consumers and longer-term business for insurance companies. This will especially be true in the areas of life insurance and annuities when the trend becomes using insurance to address non-insurance issues. Insurance is just insurance.

10. Will the insurance industry discover excellent customer service?

Quality policy owner service is not something that the insurance industry as a whole is known for. Companies that provide top-notch customer experiences thrive, are well-known for doing so and can be easily named (think: Nordstrom, Disney and Apple). Other companies are known for poor customer service, while most remain in the middle. FedEx, which used to be known for top service, now delivers packages at any time and leaves them all over the place. The point is that a quality policy owner experience will revolutionize the insurance process. If the insurance industry can learn to “delight” consumers at every step along the way from the policy selection process, policy application and underwriting process, policy monitoring and claims service, then the insurance industry will really move forward.

The Bottom Line

Greater insurance literacy will benefit consumers and members of the insurance industry. Following the guidelines of The Insurance Bill of Rights is what will move the insurance industry forward. Ask your agent and insurance company if they’ve taken The Insurance Bill of Rights Pledge and look for the Insurance Bill of Rights Seal on their website. If they haven’t taken it, ask them why not or what they have to hide about fairness and disclosure — and join The Insurance Bill of Rights Movement by signing the petition to support The Insurance Bill of Rights (click here).

If you have any feedback or your own questions for 2017, please let me know. Thanks for reading.

economy

3 Questions About On-Demand Economy

Last year, as Airbnb’s $25.5 billion valuation surpassed Hilton Hotels’ and Uber became the world’s most valuable privately owned company, it became clear the on-demand economy is no passing fad but is, in fact, a force to be reckoned with.

The on-demand marketplace is growing at a dizzying pace as new companies emerge daily, helping connect a diverse workforce of tradespeople, licensed professionals and unskilled laborers to a market of willing buyers through the company’s platforms. Intuit projects the population of U.S. on-demand workers will more than double by 2020, which means that, if you can’t already summon a doctor, lawyer, babysitter or dog walker right now via an on-demand app, then sit tight—they’re coming soon to a smartphone near you.

But the scale and speed of the on-demand economy’s growth also means policymakers, regulators, insurers and on-demand companies will have to huddle quickly to resolve the issues that arise with this expanding marketplace and its workforce. Here are the three key questions we need to address immediately:

  1. When the safeguards of the traditional corporation no longer exist, how do we protect the on-demand workforce?

Uber is currently appealing a case it lost against the California Labor Commissioner last summer regarding whether a driver is an independent contractor or an employee. While establishing this distinction is a critical issue, we still need to address some big questions about the vast self-employed workforce in the on-demand economy.

A good primer question: How do we get the information we need to make informed policy decisions? Independent contractors in the on-demand economy are classified as part of a larger pool of temporary, seasonal, part-time and freelance workforce called “contingent” workers. A 2015 U.S. Government Accountability Office report cites this workforce as somewhere between less than 5% and more than one-third of the country’s overall labor pool. The big gap in this measurement is because it depends on how jobs are defined and on the data source; the broad definitions and lack of clear data on this workforce makes on-demand independent contractors and their needs tough to track and evaluate. How much of this workforce depends on this income for supplementary purposes as opposed to relying on this income as a full-time living?

According to Intuit’s study, contingent workers will make up 40% of the U.S. workforce by 2020. That’s a lot of people working without the safeguards provided by the traditional corporation—guaranteed minimum wage, steady income, unemployment insurance, healthcare, workers’ compensation and disability insurance. What kind of safety nets do we need to put in place to protect this workforce? And what does this growing workforce mean in terms of policy development? How does the social contract change?

  1. How should we regulate hybrid commercial/consumer activities?

A sticky issue surrounding the on-demand economy is how to regulate commercial activities that are conducted by individuals rather than by traditional businesses.

While some argue that an Airbnb property should be as heavily regulated as a hotel if a host is accepting payment for lodgings, drawing an apples-to-apples comparison between the two is a challenge. For example, treehouses, yurts, igloos and lighthouses were among the top-10 most desirable vacation destinations on Airbnb shopper’s wish lists last year, some fetching upward of $350 a night. Who exactly should you call about making sure the igloo is up to code before guests arrive?

Some of the services and products offered by the individual through on-demand platforms have never been available through traditional enterprises; they’re unique, intimate experiences and, before on-demand platforms made them accessible, were difficult to find. We’re entering a new frontier where many tourists covet a culinary experience they can book at a local’s house via apps such as Feastly or Kitchensurfing rather than a fine dining restaurant, or they prefer offbeat accommodations booked through Airbnb to a 5-star hotel. We can’t assess how to best regulate these individual commercial activities until we have more data and understand the risks. How do we collect that data? How do we ensure the safety and protection of the individuals operating and participating in these activities until we have the information necessary to adequately regulate them?

  1. How can a square peg workforce function in a round hole system?

Mortgages, loans, credit cards, leases … these are just a few of life’s niceties (or necessities) that are challenging for an on-demand independent contractor to secure. Our current financial services, systems and policies were built to work for employees who collect a regular paycheck as well as freelancers who have reliable cash flow through long-term contracts and monthly retainers. Independent contractors working through on-demand platforms tend to rely on short-term gigs often generated through multiple sources, and they have difficulty predicting their day-to-day income, never mind their annual net or gross.

This isn’t a niche workforce. If independent contractors represent 40% of the U.S. working population in 2020, they’re significant drivers of the economy. They generate income and pay taxes; they need homes, cars, work equipment and all the other stuff that keeps their businesses running and makes their lives worth living. We can’t dismiss their needs, because we are measuring their 21st century income with a 20th century yardstick. How do we retrofit our round-hole systems to include this square peg workforce?

If we want a thriving economy in which people enjoy the benefits of the on-demand economy, and doctors, lawyers, drivers, plumbers and everyone else serving the on-demand marketplace have equal opportunity to succeed, then the time to talk about these questions and issues is now.

Broad Array of Roles for Disability Coverage

In the world of disability insurance, most financial advisers think of personal income protection. This is only the beginning of the possibilities that the adviser may be able to provide to safeguard clients, their businesses and assets. There are many products available within the disability insurance realm and diverse opportunities to provide your expertise.

Diversity of Product:

Key Person

The most valuable asset in a business is the people. Imagine if one of your key executives had an illness or an accident and was unable to work and continue creating revenue and profit for your company. What effect would this have on the bottom line? How would you replace the lost revenue?

Retirement/Deferred Compensation

At a closely held, family owned business, benefit plans favoring the family and the senior management are important for retention and reward. Over the past year, a non-qualified deferred compensation plan is put in place for the top 10 executives. What happens if one of the executives becomes sick or hurt and is unable to work and contribute to the plan? Can the plan be funded? If yes, how?

Contract Fulfillment

The board of a company just signed the largest contract in company history for a new CEO. The contract has financial guarantees, performance bonuses and the other usual language. What happens if the CEO becomes ill or has an accident and is unable to perform his duties? The company is on the hook for the financial guarantees. Should this be funded out of company cash flow or have the liability transferred through a disability insurance policy?

Loan Protection

There are more than 21 million small business loans valued at more than $600 billion. Business loans are taken out for business-related expenses, such as:

  • Purchase or expansion of a practice or business
  • Purchase of a large piece of equipment
  • Facility renovations
  • An increase in working capital or build-up of inventory
  • Purchase of a building or land for a business

It may make sense to provide disability insurance to cover the business loans in the event the business owner has a disabling accident or illness. There are separate insurance policies or riders to a traditional policy that provides benefits to cover the loan or loan payment obligations.

Impaired Risk

Perhaps a client will not qualify for traditional or even non-traditional coverage because of an extensive medical history. Impaired risk coverages can work for pre-existing medical conditions.

Diversity of Opportunity:

QSPP Can Prevent Dysfunction and Disruption

  • Could you continue to pay a disabled employee’s salary from your business?
  • How long could you afford to pay a salary?
  • Would the payments you pay be deductible to your business?

It is the American dream: turn a simple idea into a start-up and, through innovation, hard work and the right people, grow that start-up into an industry leader. It may seem obvious that a business owner would want to do everything to protect the people who help grow the business. As the business grows, however, offering everyone the same protection in the case of injury or illness may become difficult. Owners have a tendency to focus on partners, executive staff and key employees. This is a completely logical line of thinking, but without a Qualified Sick Pay Plan (QSPP) in place, it could put the business at high risk.

A QSPP is a formalized plan determining who will be paid, how much will be paid and how long salary will be continued when employees are unable to work because of an injury or illness. The plan can have different determinations for different classes of employees within the company. It can also be self-funded, or funded through an insured product, such as disability income policies.

Why a QSPP?

There are two key reasons: tax implication of benefits paid and potential precedent. The Internal Revenue Code states that wages paid to a disabled employee may not be deductible as a business expense unless they are paid under a salary continuation program. Without a program in place, any payments made are not deductible by the business and are fully taxable to the employee.

The implementation of a plan allows a business to deduct wages paid to employees who cannot work, and an employee can receive qualified benefits tax-free. The absence of a QSPP could result in the IRS disallowing benefits paid to an employee as sick pay. This would have serious tax implications on the employer and the employee.

An even greater danger to an employer is the existence of benefit payment precedent. It may seem completely logical to continue the salary of key employees responsible for revenue growth, but, without a QSPP, any sick pay for any employee creates a precedent of the same pay for all employees. Any variation between employees could be viewed as discrimination. To eliminate this risk, it is important to create a formal, written plan stating any differences of salary continuation length or frequency between classes of employees before an employee needs to use it.

How Is a QSPP Implemented?

A QSPP requires two components: a plan resolution and plan letters to employees.

A plan resolution is drafted and executed by the company’s board. This resolution defines the classes of employees, how benefits will be paid and how long they will be paid.

Plan letters communicate the information to the employees. They can be class-specific.

How Can Benefits Under a QSPP Be Funded?

This is an important consideration. A QSPP can be fully self-funded, fully insured or a combination. If a plan is fully self-funded, the company can be burdened with all of the responsibility of determining who cannot work and how long they can’t work and of paying benefits from company accounts during a time when, depending on the person who cannot work, the company may need the funds the most. Additionally, the FASB 112 Accounting Rule makes a company become an insurance company by requiring it to carry the present value of future claims as a liability on the balance sheet if it chooses to self-fund a salary continuation program. Two implications of FASB 112 are:

  • Companies with self-funded disability programs must set aside all the money upfront
  • This requirement can significantly reduce profits while increasing liabilities

Under a QSPP plan with disability income insurance, the insurance company determines when your employees cannot work, the insurance company determines how long they cannot work and the company pays smaller, regular payments for the benefit during a time when all employees are actively at work. A fully insured plan not only takes much of the liability away from the employer, but it also allows the company to predict future plan costs. Disability income insurance premiums are level for the life of the policies. Three tax shelters of an insured salary continuation program are:

  • Premiums paid are deductible as a fringe benefit expense (IRC Section 162(a)).
  • Employer premiums are not included in employee’s taxable income. (IRC Section 106).
  • A special tax credit may be available for employees that are permanently and totally disabled (IRC Section 22(b)).

In working with the son of the owners of a medium-sized technology security firm, I learned that Mom and Dad would take care of the son if anything were ever to happen. As a financial adviser, what do we do now? A conversation about the company benefits and what the parent/owners wanted to have happen with their family and their employees created an opportunity. By educating the clients on sick pay plans, we were able to provide better recommendations to the owner (parents) for the benefit of the son and the other employees while keeping the firm in legal compliance.

Divorce Settlements

Most if not all settlements include division of assets and liabilities owned by the parties. Additionally, when appropriate, especially if there are children involved, there is an alimony agreement. What happens to the continuing alimony payment if the payer becomes sick or hurt and unable to earn the income to make the support payment?

With the divorce rate at 50% or higher for U.S. marriages, there is an opportunity to protect a spouse and provide the children a source of income used for living and educational expenses. The solution is to place a disability insurance policy on the payer, with the spouse as beneficiary.

Occupational Diversity

Students, coaches, umpires, golf professionals, chefs, race car drivers, comedians and musicians, to name just a few, are thought to have a hard time obtaining disability income insurance. They are not hard to insure if you are able to go a little deeper within the traditional markets or outside to the non-traditional markets.

Our hobbies sometimes position us to have access to people in these diverse occupations. One of my hobbies is to watch, listen and learn from professional speakers. It has been a privilege to spend time with some of the all-time greats. I am always amazed at their accessibility if you step forward and participate. Once, I hosted Chris Gardner, who became nationally know for his life story through the movie “Pursuit of Happiness,” where his role was played by Will Smith. As Chris and I began building a relationship, he learned about our firm, and it became evident that no one had spoken to him about protecting his flow of income from a disabling accident or illness.

There are many diverse opportunities for you as the adviser to protect your client’s flow income, business entity and valued assets. Think beyond personal disability insurance and help your clients understand their needs to secure their financial foundations.

Can You Trust the Aflac Duck?

I'm always a bit skeptical when companies report the results of self-serving surveys, so let's look at what Aflac — you know, the duck-spokesman company — said about a survey that indicated that offering disability insurance coverage to workers could drive workers' compensation claims down considerably. The survey found:

  • 42% of all companies providing voluntary accident and disability insurance report declines in their workers’ comp claims—some of as much as 50%.
  • Roughly 17% of employers offering voluntary accident insurance and 15% of those offering disability saw claims declines of 25% to 49%. The declines were most frequent for large employers, 55% of whom saw workers’ compensation claims drop. Of small- and medium-sized companies, 34% reported the same results.

Is this really true? Can simply purchasing disability insurance really lower the number of workers' compensation claims? Forgive me for immediately thinking that this sounds a bit like the marketing strategy of snake oil salesmen: “Buy one bottle of this magic elixir, and it cures everything from rheumatism to scarlet fever.”

I can think of three reasons why “purchasing disability insurance = lower workers' comp costs” may not be a valid equation.

1. Lower claims may not amount to lower costs.

In the exposure mod rating game, there is no question that lowering the number of claims can reduce the E-Mod and result in lower premiums. However, just because the claims are lower does not automatically mean that the costs are lower.

For example, if the claims reduced by the purchase of disability insurance were small medical-only claims or small lost-time claims, this would reduce the actual number of claims but may not have much of an effect on the E-Mod of a large company that also has more serious injuries. Sure, the number of claims may have gone down, but if Acme Co.’s comp costs stayed the same because of the presence of larger or more serious claims, does that really amount to a substantive benefit?

2. Disability insurance cost may exceed any savings on workers' comp.

What this survey doesn't tell us is how much companies had to spend on disability insurance coverage to realize the savings in workers' comp costs. In other words, did Acme Co. have to spend an additional $100,000 for the disability insurance coverage to save $40,000 in workers' comp costs? If so, that doesn't seem like much of a bargain – – spending $100,000 to save $40,000 (unless we use U.S. federal government math. . . . )

The survey didn’t give us this information probably because the costs to purchase disability insurance coverage would be different for every company surveyed, as would the savings (if any) from the alleged reduction in workers' compensation claims. Nevertheless, I don’t see how we can determine the validity of the “purchasing disability insurance = lower workers comp costs” equation unless we know the ratio of dollars spent on disability insurance vs. the dollars saved in workers comp costs.

3. Why would injured workers leave money on the table?

Let’s assume that Joe Sixpack is injured on the job. If his employer, Acme Co., has both disability insurance and workers' comp coverage, Mr. Sixpack now has a choice of how he seeks payment for medical care and payment of lost wages. The implied argument from the survey is that if Mr. Sixpack has the choice between the two, he will choose disability insurance over workers' comp, thereby reducing the number of comp claims for Acme Co.

But wait…does disability insurance pay for permanent partial disability benefits? Does disability insurance pay for permanent total disability? Does disability insurance pay benefits longer than the term specified in the policy?

Obviously, the answer to these questions could vary. However, in most states, workers' compensation coverage would pay an injured worker a lot more money than the type of disability coverage refererred to in the survey. I’m not attempting to argue that injured workers should choose workers' comp over disability insurance — but I am pointing out that claimants will typically choose whichever type of benefit will pay them the most money. If that turns out to be workers' comp, then it is doubtful that claimants would be so magnanimous as to choose to file a claim through disability insurance.

Finally, the state where Mr. Sixpack lives may allow him to file a comp claim after he gets benefits through his disability insurance coverage. The presence of disability insurance wouldn’t even amount to a reduction in claims if Mr. Sixpack pursues both avenues.

Bottom line: If you are considering the purchase of disability insurance coverage because it may decrease your workers' comp costs, make sure the math works. Ducks are cute, but I don’t trust their math skills.