Zurich finds most workers underinsured on income protection and life cover
Open enrollment for most calendar-year plans is weeks away, and a significant share of employees heading into it are underinsured on income protection, life cover, and post-retirement care — often without knowing it.
A 2024 LIMRA survey of approximately 4,000 US employees, cited in a client-facing piece published by Zurich's global employee benefits team, found that only 56 percent said they understood their life insurance and just 47 percent understood their disability coverage. Harriet Taylor, Zurich's head of global employee benefits, identifies that comprehension failure as the core problem: employees who do not understand the protections they already have will never identify the gaps where they do not have them.
The three gaps Zurich maps are directly relevant for HR leaders reviewing plan communications before the enrollment window opens.
The three gaps: where employer-sponsored plans fall short
The first gap is income protection. Employer-sponsored disability cover typically replaces a portion of salary and is capped at a level that higher earners outgrow quickly. An employee earning at the top of their income band may find, if they run the numbers, that the replacement rate their plan delivers in the event of a serious illness or injury leaves them significantly short of their actual obligations.
The second gap is life cover tied to employment. Employer-sponsored life insurance exists only while the employee is with the organization. It disappears on the day they leave — through resignation, redundancy, or retirement — at the exact moment when finding comparable individual coverage at group rates is no longer possible. Most employees are unaware of this until it becomes relevant.
The third gap is post-retirement care. Employer-sponsored benefits are generally not designed to cover the long-term care needs employees will face after they leave the workforce. For employees in their 40s and 50s, that gap is far enough away to feel abstract and close enough to be financially material.
The voluntary top-up mechanic most employees skip
The Zurich analysis does its most useful work in explaining how voluntary top-ups work. Employer baseline life cover is typically one or two times salary. A voluntary top-up allows an employee to increase that figure — often without individual medical underwriting and at group rates materially better than comparable retail products. The same applies to income protection, critical illness, and accident cover.
The window to act is open enrollment. Once it closes, the opportunity to add voluntary coverage at group rates does not reopen until the following year. That timing makes the communication decision a now-or-never question for most HR teams.
As HRD has reported, benefits costs are rising sharply as employers tighten their grip on what plans deliver — which makes the argument for voluntary coverage that employees fund themselves, at group pricing, more rather than less relevant from an employer cost-management standpoint.
The sandwich generation angle
Zurich raises the sandwich generation framing directly: employees simultaneously supporting children and aging parents carry a more complex protection need than a standard employer-sponsored package was designed to meet. That cohort — workers in their 30s and 40s with mortgage obligations, dependents, and aging parents — is also the one most likely to be underinsured relative to their actual financial exposure.
For HR leaders managing multi-generational workforces, the gap between what the benefits package covers and what this demographic actually needs is worth surfacing explicitly in enrollment communications. The employees most likely to be significantly underinsured are often the same ones who feel financially stretched enough to resist adding voluntary coverage — a pattern that open enrollment communication can address when it is framed around actual financial exposure rather than product features.
The prevention framing worth adding to enrollment communications
Filippo Mazzei, Zurich's head of proposition management for corporate life and pensions, frames the benefits review as a resilience question across three dimensions: financial, physical, and mental. In practice, that means access to savings planning, mental health coaching, and digital physiotherapy before a claim exists — services increasingly embedded in group benefit packages but rarely communicated clearly to employees.
Moving the conversation from coverage adequacy to workforce resilience — from what responds after something goes wrong to what prevents employees from getting there — changes how people engage with the enrollment decision. As HRD has covered, rising benefits costs are forcing HR to get smarter, not leaner, and the voluntary benefits conversation is one of the clearest places where that shift in framing pays off.
Most calendar-year plans open enrollment in October or November for January 1 effective dates. The window to put this information in front of employees before they make their decisions is now.
