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Research Reveals Information About Disability Insurance Lags Behind Other Personal Finance News

NEW YORK, June 21 /PRNewswire/ — Consumers rely heavily on the media for information they need to make financial decisions, but few personal finance articles provide key information about disability insurance according to a new research report unveiled this week by The Guardian Life Insurance Company of America (Guardian).

Many American consumers don’t fully understand disability insurance, or DI. According to a recent Guardian study 76% of people say they understand their auto insurance, but only 58% say the same for their disability insurance. And nearly half (48%) of consumers don’t realize that disability benefits are taxable when received from an employer-paid policy. Some 46% of respondents from a Guardian survey believe group disability requires a medical check-up before purchase. However, this is generally not true.

The Disability Insurance Media Analysis, conducted for Guardian by Cision, a leading media intelligence company, analyzed 493 articles from the top 50 daily newspapers and top personal finance, business and news magazines (by circulation), as well as leading wire services, published between January 1, 2005 and December 31, 2006.

The media analysis report reveals that, while consumers value income protection and disability insurance remains an enigma to employees, disability insurance receives very little attention in top personal finance news outlets relative to other financial products.

According to the study, just over half of the DI mentions were in the “minority” — meaning other types of insurance (e.g., auto, health, life) were featured more prominently.

“We don’t expect personal finance reports to replace the role of the financial advisor, broker, HR executive and insurance carrier,” said Larry Hazzard, vice president, Product and Marketing, Berkshire Life Insurance Company of America (Berkshire), a Guardian subsidiary. “The industry has to do a better job at communicating information about disability insurance. But we can’t ignore the power of the media. Guardian research shows consumers are more likely to pay attention to articles in the popular press than to heed communications from their own employer’s human resource department or financial advisors.”

For this study, initial categorization of each news item was based on how complete the discussion of disability insurance was within the article. Articles were tagged as “Incomplete”, “Good”, “Better” or “Best.”

The study reveals that little more than half of the cumulative audience reach between 2005 and 2006 came from articles considered to be “good.” That is, they acknowledged the importance of disability insurance but did not provide details on types of policies or on tax implications as did “better” articles, which comprised one-fifth of cumulative reach.

“Best” articles were scarce with only a few examples found each year. These articles included all the characteristics of a “better” article but also discussed group and individual policies in detail, including such aspects as non-cancelable coverage, occupation-specific protection and retirement income protection.

“This media analysis report is just one part of many steps that need to be taken to close the disability insurance knowledge gap,” said Barry Petruzzi, 2nd vice president, Group Life & Disability, Guardian. “It is important for the insurance industry to work with both the trade and consumer media to underscore key messages and bring attention to issues that are valuable to Americans, but largely absent from news and personal finance reports. At a time when we’ve had a negative full-year savings rate for two consecutive years and employees hold greater personal responsibility for their financial future an income safety net like disability insurance is more important now than ever before.”

Additional findings from the report include:

— Well over half the mentions of the articles analyzed were “passing” in
nature — meaning there were only brief mentions within the context of
an article.
— Over one-quarter of the articles featured exclusive mentions of
disability insurance, yet were primarily in “incomplete” or “good”
articles suggesting that articles solely about disability insurance are
not offering enough information about the product.

The report also looked at the prevalence of 5 key disability insurance issues/messages reported by the popular press, including:

1. Consumers often underestimate the need for disability insurance. (17%
of articles in 2006; 14% of articles in 2005)
2. The ability to earn an income is a worker’s most important asset. (9%
in 2006; 3% in 2005)
3. Small business owners should consider disability insurance. (4% in
2006; 6% in 2005)
4. Explanation about when benefits are taxed. (3% in 2006; 2% in 2005)
5. Policies are available that protect 401(k) contributions in addition to
income. (1% in 2006; 1% in 2005)

“This media analysis report revealed that there is a critical need for more information about retirement income protection,” said Matthew Gottfried, director, Individual Disability Income, Berkshire. “Out of nearly 500 articles that mention disability insurance, over the course of two years, less than five discussed the importance of retirement income protection. As we shift toward a defined-contribution model for retirement Americans are at risk because they are not protecting their ability to save for retirement. If they are unable to work for a period of time due to accident or illness they may be forced to stay in the workforce longer than desired to make up for the lost savings, or worse, forced to retire without an adequate nest egg.”

A Guardian study entitled Insurance & Behavior - Spotlight on IDI shows that nearly half (48%) of Americans say they would probably have to stop making contributions to their retirement account should they become disabled.

“Nearly one out of every three workers will suffer a disability lasting three months or more at some point in their career, yet our research shows that 70% of working Americans say they couldn’t afford to live without their paycheck for even one month before financial struggles would start to mount,” said David F. Woods, CLU, ChFC, president of the LIFE Foundation. “Whether purchased individually or through work, the right type and amount of disability insurance can protect against this scenario. The LIFE Foundation is committed to working with the media, industry organizations and insurance carriers like Guardian to spread the word about the importance of disability insurance during Disability Insurance Awareness Month every May and throughout the year.”

About Guardian

Founded in 1860, The Guardian Life Insurance Company of America, New York, NY (Guardian) is one of the largest mutual life insurance companies in the United States. As of December 31, 2006, Guardian and its subsidiaries had $39.5 billion in assets (on a consolidated statutory basis). With more than 5,000 employees and 3,000 financial representatives, as well as more than 80 agencies nationwide, Guardian and its subsidiaries protect individuals, businesses, and their employees with life, disability, health, long-term care, and dental insurance products, and offer 401(k), annuities and other financial products and trust services. More information about Guardian can be obtained at: http://www.guardianlife.com/.

About Berkshire

Berkshire Life Insurance Company of America, Pittsfield, MA (Berkshire), is a wholly owned stock subsidiary of The Guardian Life Insurance Company of America, New York, NY. Its key missions are to grow Guardian’s disability income and long-term care lines of business and to research and develop new insurance products. More information about Berkshire can be obtained at http://www.berkshirelife.com/.

About LIFE

The Life and Health Insurance Foundation for Education (LIFE) was founded in response to the public’s growing need for information and education on life, health, disability and long-term care insurance. LIFE also seeks to remind people of the important role insurance professionals perform in helping families, businesses and individuals find the insurance products that best fit their needs. To learn more about these topics, please visit http://www.life-line.org/.

About Cision AB

Cision AB (http://www.cision.com/) is a global industry leader in business and communication intelligence. The firm provides media research, distribution, monitoring and communication evaluation, as well as target group identification and distribution of information for PR and IR purposes. Cision AB has annual revenue of SEK 1.9 billion, and has around 2,700 employees in the United States, United Kingdom, Sweden, Canada, Germany, Norway, Finland, Denmark, Portugal, Estonia, Latvia, and Lithuania.

By Kimberly Lankford Kiplinger’s Personal Finance

Auto insurers are making big changes in the way they price policies, and that can mean big savings for you.

In the past, most insurers based premiums on only a handful of variables — type of car, place of residence, age, marital status and driving record. Now they focus on 30 or more factors. “I predict that the 14 companies I work with will all change their pricing within the next few years,” says Tom Minkler, an independent agent in Keene, N.H.

For example, insurers have found a strong correlation between credit history and insurance claims, and they have been taking credit history into account for some time in states where it’s legal. Now they’re studying credit reports in even more detail, noting, for example, if you’ve made payments 30 or 60 days late.

Because they now have the computing power to pinpoint risk and match it to specific prices, insurers no longer have to cram a variety of people into a wide pricing tier. Allstate used to use just seven pricing tiers; it has now expanded that number to 384. As a result, drivers with the best records have seen their rates drop as much as 25 percent. “If you’re a better driver, your rates are likely to fall because the subsidies that you’ve provided to worse drivers will be reduced,” says Bob Hartwig, president of the Insurance Information Institute.

But even people with poor driving records are likely to benefit. In the past, drivers with multiple accidents or major violations were relegated to high-risk insurers that charged hefty premiums because mainstream companies didn’t have a system for pricing high- risk policies. Now mainstream companies are offering to cover riskier drivers, often at lower rates than those of high-risk insurers.

What does all this mean to you? The company that offered you the lowest price under the old rules may no longer have the best deal. Even under the new pricing structures, “the difference in premiums can be several hundred dollars,” says Minkler.

You may benefit from working with an agent to find the best price. You can find an agent in your area through www.iiaba.net; also contact agents who sell for a single company, such as Allstate or State Farm.

In addition, you may qualify for special programs, such as Allstate’s Your Choice Auto. With a record of good driving, you’re eligible for discounts: Your deductible is lowered by $100 for every year without an accident (with a maximum reduction of $500), and you get a 5 percent premium discount for every year of accident-free driving, plus a guarantee that your rates won’t rise if you have an accident.

(c) 2007 Deseret News (Salt Lake City). Provided by ProQuest Information and Learning. All rights Reserved.

Yes, Virginia, there is venture capital on Long Island. And it’s growing.

Long Island-based VC and private equity firms are investing close to home, taking stakes in successful local companies, rescuing troubled Island firms and rolling out new funds. And they’re doing so well, they’re looking across the country for more investment opportunities.

In May, principals at Roslyn Heights-based Topspin Partners, which specializes in investing in local companies, closed on $115 million for a new leveraged buyout fund. While Topspin has focused primarily on early-stage firms, the new fund is designed to acquire more established private companies.

Topspin already has invested in such Long Island firms as FatWire, CosmoCom, FalconStor and photography equipment maker Tiffen, which it acquired out of bankruptcy in 2003.

Meanwhile, Syosset-based Northwood Ventures, which has been investing through acquisition, led a $15 million bailout in February of Mineola-based home and auto insurance firm Interboro Insurance Co.

Andrew Wilder, partner at Hauppauge-based Israeloff, Trattner & Co., said investors are flocking to these funds as private companies become more appealing thanks to the growing disclosure risks of public companies.

“There’s a ton of money out there in this economic environment, looking for a home,” Wilder said.

Topspin and Northwood, which take active roles in firms they acquire, found big benefits by investing close to home. Stephen Lebowitz, a managing director at Topspin Partners LBO, the new fund, said his firm values its ability to “find deals in our backyard.”

Northwood Chief Executive Officer Peter G. Schiff said it’s simpler to work with management down the block than with a team across the country. “It’s a lot easier to be in touch with the people,” Schiff said. “You can call them up and say, ‘Let’s have lunch.’”

Interboro CEO David Nichols said Schiff, now chairman of Interboro’s board, is heavily involved in the business. “He’s not a passive investor,” Nichols said.

Tiffen CEO Steve Tiffen said Topspin CEO Leo Guthart helped turn his company around by providing both cash and management assistance. Among other things, Guthart – a former Ademco chairman – helped Tiffen assemble a topflight board and bring in a new chief operating officer.

“Without meddling in management, they try to help by supporting management’s goals,” Tiffen said. “They have an incredible network of professionals they know and use.”

Northwood Ventures also seeks to invest close to home, because it’s more likely to understand local markets and hear about local opportunities. Northwood saw other insurers cooling to the local homeowner policy market, for instance, and recognized an opportunity.

Investing close to home pays off in other ways. New York State Insurance Department Superintendent Eric R. Dinallo said in a written statement the revival of Interboro saved nearly 70 Long Island jobs and gave “another option” for home and auto insurance.

In 2004, Interboro went into rehabilitation, the insurance industry equivalent of bankruptcy. It emerged in February with the help of Northwood and other investors. The company, which employs about 65 in Mineola, sells policies through about 125 independent brokers.

“They’ve had their hands tied for a few years,” Schiff said. “Now they’ve been newly capitalized and they’re off to the races, writing new business.”

Tiffen is doing well also, employing 110 on Long Island, about 25 more than it employed when Topspin acquired it. “We’re back on a growth path,” Tiffen said. “Sales are up. Profits are strong. Topspin will make a good return on their investment.”

This doesn’t mean Long Island-based VC funds invest strictly on Long Island. Northwood recently acquired a Nashville, Tenn.-based restaurant operator, for instance.

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