As an employer, the greatest ability your employees can have is availability. Unfortunately, your employees are far more likely to suffer from a lack of availability than you, or they may believe. According to the Council on Disability Awareness, one in four working Americans will miss up to three months of work due to illness, injury, or pregnancy/maternity leave.
So, it’s rational for you, the employer, to want to protect both these employees and your business, during their absence. Luckily, one such potential protection already exists. Long and short-term disability insurance work to protect your employees in case an injury or illness knocks them out of the workplace for an extended time.
In this article, we’ll define disability insurance then detail how this benefit helps both your employees and your entire business. Keep reading to find out the hidden benefits of both long and short-term disability insurance.
What is Disability Insurance?
Disability insurance is a type of insurance that provides income to a worker in the event they’re unable to perform their work and earn money, due to a disability. There are different types of disability insurance, and each type has specific rules as to what constitutes a disability and how a person might qualify to receive disability insurance.
There are two main categories of disability insurance: long-term and short-term disability. Short-term disability insurance policies offer a worker a portion of their salary if they’re unable to work for a short period – usually three to six months. Long-term disability provides a worker a portion of their salary if they’re unable to work for a longer period – usually over six months.
Effects of Disability Insurance for Employees
As previously discussed, there’s a high probability 25 percent of your employees will miss up to three months of work for one reason or another. Disability insurance protects these employees in the event they must miss a significant portion of work. This protection delivers a plethora of positives for your staff and their dependents.
1. Financial Security
Disability provides your staff with a level of financial security in case of an injury, illness, or birth. This financial security is vital to your employees for several reasons. Per the Federal Reserve, most Americans don’t have enough savings to cover three months of living expenses. Similarly, over 40 percent of consumers today say they couldn’t pay an unexpected bill of $400.

Both numbers illustrate the fact there are a large portion of employees everywhere who would struggle if they couldn’t make it to work for an extended period. And this lack of savings equates to an increase in financial stress among your workers. Disability insurance gives your employees a baseline of financial security that can protect them from this stress, in case of an extended absence from work.
2. Less Stress
We already know an absence from work can wreak havoc on your employees’ finances. But do you understand the full impact the resulting financial stress can have on your staff? According to the Financial Fitness Group, over 80 percent of employees have been affected by financial stress.
Furthermore, per Enrich Financial Wellness, 46 percent of employees consider finances their primary source of stress. And, if your employees experience a lengthy work absence, and don’t have disability insurance, this financial stress could reach a fever pitch.
Learn more about how financial wellness can ease your employees’ stress.
3. Healthier Employees
Another advantage disability can provide your employees is improved health. This may seem contradictory on the surface but think about it for a second. Obviously, you’d only use disability insurance if you suffer an injury or illness. But disability insurance protects your employees both before they suffer a disability, and after. This coverage can help decrease employee stress and keep your employees in a healthier state of mind.
4. Improved Gender Equality
The final advantage disability insurance offers your staff is the potential to close the gender equality gap in the workplace. Greater than one in four working women will experience a serious work disability at some point in their career, per the Council for Disability Awareness. Yet according to the council, more than 52 percent of single, working women have no disability insurance at all.

This lack of coverage for working women is especially troublesome because the leading cause of short-term disability is pregnancy. Disability insurance can give new mothers a form of paid maternity leave while they recover from childbirth. Without this coverage or the support of a partner, your single mother-employees could struggle financially.
This financial struggle, in turn, only further extends the economic gender inequality gap. Use long and short-term disability insurance to protect your female employees and attempt to close the current gender equality gap in the workplace.
Read about how this one benefit can help close the gender wage gap.
Effects of Disability Insurance for Employers
So, we now understand how disability insurance can assist and support your employees through an extended work absence. But this coverage also works to aid employers. The more employees who are protected through disability insurance, the more your workplace as a whole benefits.
1. Improved Recruitment and Retention
Offering cheap, or free disability insurance is an excellent tool for both recruitment and retention. Most employers who provide disability insurance typically offer it as a voluntary or enhanced benefit. So, if your firm provides disability coverage for free or at a discounted rate, it’s a real differentiator. And, in a competitive labor market, a differentiator like this can be a significant recruitment/retention tool.
2. Decrease in Absenteeism/Turnover
If an employee suffers an illness or injury but doesn’t have disability insurance, this scenario could result in a case of employee absenteeism or turnover. Without disability insurance, an injured or ill employee may either show up to work distracted and in pain or may miss out on work entirely.

Plus, if these employees don’t take time off from work to heal, or attend work either injured or ill, it makes it harder and/or more time-consuming for that worker to heal completely. This lack of recovery could, in turn, increase your company’s healthcare costs.
Similarly, disability insurance can protect your company against unnecessary turnover. According to MetLife’s Annual Employee Benefits Study, employees who don’t have disability insurance are less likely to return to work after an incident. Disability coverage gives these employees a financial bridge between their illness or injury, and their return to work.
3. Boost in Productivity
The final, and arguably most vital, advantage of disability insurance is a boost in workplace productivity. Per the Integrated Benefits Institute, illness-related productivity loss costs U.S. employers $530 billion per year. A large portion of these productivity losses is attributed to presenteeism. Presenteeism, per Employee Benefits Adviser, is the practice of going to work despite illness, injury, or a mental health condition.
In total, presenteeism costs U.S. employers up to $250 billion annually. Similarly, a 2018 study by the Global Corporate Challenge detailed similar results. According to the study, employees reported they lost an average of 57.5 days per year because of low productivity. Essentially, the average employer is losing almost 60 days of productivity, per employee, to presenteeism. Disability insurance can protect against presenteeism and its associated, adverse effects.
The Wrap
If you knew a rare disease was infecting one-fourth of your workforce, you’d do all you could to treat this disease, right? Well, 25 percent of your staff will experience an absence of three months or more during their career. Support these employees and their families by offering complimentary or cheap long and short-term disability insurance.