Many American workers are facing increased financial struggles as they navigate into the new year. Insurance plays a crucial role in maintaining employees’ economic stability, but obsolete benefits terminologies can leave workers without vital paycheck protection when unforeseen circumstances arise. The current financial stability of American workers has been disrupted by inflation and an unstable global economy. The Federal Reserve’s recent data shows fewer adults feeling financially secure, reaching lows not seen since 2016. Those with fixed jobs find their earnings going towards the escalating cost of living, educational loans, and other daily expenses.

According to research by The Hartford, approximately 40% of U.S. workers claimed to possess less than $1,000 in emergency savings, or none at all. This limited savings leaves American families vulnerable during unexpected life events. LIMRA data suggests that should an earning family member suddenly pass away, 25% of U.S. adults would be in financial difficulty within just a month. A further 40% could only last up to six months before facing economic hardship.

Every year, companies provide employees with the chance to sign up for health insurance and further benefits for the upcoming year, which includes supplemental health benefits like accident, critical illness, and hospital indemnity, along with life and disability insurance, potentially above what their employer already supplies. Enrollment season also presents an opportunity to instill in workers the importance of employer-funded benefits.

Despite most facets of life insurance being well-known, according to Forbes research, certain critical insurance products, such as accidental death and dismemberment insurance, remain less appreciated and understood, much like supplemental health benefits. These kinds of benefits, typically provided at very low or zero cost, offer a cash payment that can assist with costs not covered by health insurance, like deductibles or other domestic expenses such as childcare or utility bills.

However, these benefits are often misunderstood, due to ambiguous and sometimes harmful terminology from outdated policies. Consequently, this can lead to workers overlooking key benefits that protect their income, further exacerbating financial stress amidst challenging economic conditions.

This obscurity may also prevent them from understanding the free benefits that employers provide to support their employees. For example, new parents may not be aware that short-term disability insurance covers income replacement for recovery post-childhood, not usually seen as a disability.

The need to modernize employee benefits and their communications is apparent with many American workers on the edge of financial hardship. HR and benefits leaders, in collaboration with insurers, must prioritize simplified language and clarify both available benefits and their usage, fundamentally enhancing U.S. workers’ understanding of their benefits. This could create a safety net for U.S. workers and their families, leading to improved financial stability and a more satisfied, healthier and productive workforce.