1. SHRM Survey Findings: 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income In collaboration with and commissioned by MassMutual September 18, 2013

2. In collaboration with and commissioned by MassMutual The 2013 Employer Perspectives on Disability Benefits survey, which was commissioned by MassMutual, is a collaboration between the Society for Human Resource Management and MassMutual. The survey was sent to a randomly selected sample of SHRM members from a variety of industries. A response rate of 10% was achieved with 4,402 responses. The main purpose of this research was to gain a better understanding of organizations’ needs and gaps regarding long-term disability and executive benefits. The 2012 data were collected from a sample including small-, medium- and large-staff-size organizations (see slide 19). The findings are divided in the following topics:  Base Group Long-Term Disability Plans  Compensation and Buy-Up Coverage  Supplemental Plan/Individual Disability Income  Carrier Satisfaction/Changes  Executive Group Life Benefits 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 2 Introduction

3. In collaboration with and commissioned by MassMutual The results of each question are reported by the overall sample, and then, where applicable, statistically significant differences by organization staff size, industry and region are included. Only statistically significant differences with a sample size of 25 or more were reported. The results are based on respondents who indicated that they were either “extremely knowledgeable,” “very knowledgeable” or “somewhat knowledgeable” about their organization’s employee benefits plan. The results include respondents from publicly owned for- profit or privately owned for-profit organizations only. 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 3 Introduction (continued) IndustriesOrganization Staff SizeRegion  Accounting/architectural  Computer and electronic products/technology  Energy, gas, oil  Financial services  Health care services  Information services  Law firms and legal services  Manufacturing  Pharmaceutical and medicine  Physician and dental offices  Professional, scientific and technical services  Telecommunications  Utilities  Wholesale and retail trade  Other industries  1 to 99 employees  100 to 499 employees  500 to 2,499 employees  2,500 to 24,999 employees  25,000 or more employees  Midwest  Northeast  South  West

4. In collaboration with and commissioned by MassMutual 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 4 Supplemental Plan/Individual Disability Income

5. In collaboration with and commissioned by MassMutual How many organizations offer an individual disability income program to supplement their group plan? Only 19% of organizations offer supplemental disability income.  Among organizations with these plans, the majority (70%) implemented their program three or more years ago.  Overall, 76% of organizations reported 50% or more of their employees are eligible for this coverage.  The top factors that determine eligibility for this program were employees’ compensation (25%), the number of years employed by the firm (19%) and employee job title (14%). Will organizations continue to offer a supplemental individual disability income program? Only a small portion of organizations currently offer supplemental disability income. Since many expect the cost of health care to rise and most organizations do not provide this benefit because employees can purchase it by themselves, the burden of attaining supplemental individual disability income will most likely be placed on employees. What are the reasons why organizations do not offer a supplemental individual disability income program? The top three reasons cited are 1) employees can purchase it on their own (52%), 2) the administrative burden is too high(25%), and 3) organizations are concerned about costs (24%). 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 5 Key Findings in Supplemental Plan/Individual Disability Income

6. In collaboration with and commissioned by MassMutual Supplemental disability coverage may be an underutilized benefits offering by organizations. Given the uncertainty of future health care costs, organizations may be cautious about adding additional programs to their overall benefits package. Supplemental disability coverage may be an option for organizations to consider as employees usually pay for the coverage out of their own pockets (71% of organizations reported that employees pay 100% of coverage). The main reason that organizations indicated for not currently providing supplemental disability coverage is that employees can purchase it on their own; however, the likelihood of employees being informed enough to seek out these programs is slight. It may be beneficial for organizations to inform employees about supplemental disability coverage and its potential impact on employees’ financial wellness. 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 6 What do these findings mean for HR professionals?

7. In collaboration with and commissioned by MassMutual Do you offer an individual disability income program to supplement the group plan? 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 7 Note: n = 3,425. Only respondents whose organizations offer a group long-term disability plan were asked this question. Respondents who answered “don’t know” were excluded from this analysis.

8. In collaboration with and commissioned by MassMutual Which of the following are reasons why your organization does not offer an individual income program to supplement the group plan? 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 8 Note: n = 1,929. Only respondents whose organizations offer a group long-term disability plan but do not offer an individual disability income program were asked this question. Respondents who answered “don’t know” were excluded from this analysis. An asterisk (*) indicates that this response option was developed from open-ended responses. Percentages do not total 100% due to multiple response options.

9. In collaboration with and commissioned by MassMutual Note: Only statistically significant differences are shown. Which of the following are reasons why your organization does not offer an individual income program to supplement the group plan? 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 9 Smaller staff-size organizations are more likely than larger organizations to be unaware that individual income programs are available. Larger staff-size organizations compared with smaller organizations are more likely to be concerned about the costs associated with offering an individual income program. Comparison by organization demographics Organization is unaware that programs are available 1 to 99 employees (12%) > 500 to 2,499 employees (5%) 2,500 to 24,999 employees (3%) Organization is concerned about costs associated with the offering 2,500 to 24,999 employees (30%) > 100 to 499 employees (21%) 25,000 or more employees (41%) > 1 to 99 employees (25%) 100 to 499 employees (21%) 500 to 2,499 employees (22%)

10. In collaboration with and commissioned by MassMutual In what year was the supplemental disability income program implemented? 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 10 Note: n = 522. Only respondents whose organizations offer a group long-term disability plan and an individual disability income program were asked this question. Respondents who answered “don’t know” were excluded from this analysis. Percentages do not total 100% due to rounding.

11. In collaboration with and commissioned by MassMutual What percentage of your employees are eligible for the supplemental disability income coverage? 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 11 Note: n = 548. Only respondents whose organizations offer a group long-term disability plan and an individual disability income program were asked this question. Respondents who answered “don’t know” were excluded from this analysis.

12. In collaboration with and commissioned by MassMutual Which of the following items is a factor in determining eligibility for the supplemental disability income program? 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 12 Note: n = 494. Only respondents whose organizations offer a group long-term disability plan and an individual disability income program were asked this question. Respondents who answered “don’t know” were excluded from this analysis. An asterisk (*) indicates that this response option was developed from open-ended responses. Percentages do not total 100% due to multiple response options.

13. In collaboration with and commissioned by MassMutual What percentage of eligible employees have purchased supplemental disability income coverage? 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 13 Note: n = 468. Only respondents whose organizations offer a group long-term disability plan and an individual disability income program were asked this question. Respondents who answered “don’t know” were excluded from this analysis. Percentages do not total 100% due to rounding.

14. In collaboration with and commissioned by MassMutual How much, if any, of the supplemental disability income coverage is paid for by the employee? 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 14 Note: n = 546. Only respondents whose organizations offer a group long-term disability plan and an individual disability income program were asked this question. Respondents who answered “don’t know” were excluded from this analysis.

15. In collaboration with and commissioned by MassMutual Note: Only statistically significant differences are shown. How much, if any, of the supplemental disability income coverage is paid for by the employee? 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 15 Organizations located in the Midwest are more likely than organizations in the South to require employees to pay 100% of their supplemental disability income coverage. Comparison by organization demographics 100%Midwest (78%) > South (63%)

16. In collaboration with and commissioned by MassMutual 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 16 Demographics

17. In collaboration with and commissioned by MassMutual Approximately what percentage of regular, full-time and part- time employees are eligible for employee benefits at your organization? 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 17 Less than 25% 25% to 49% 50% to 59% 60% to 69% 70% to 79% 80% to 89% 90% to 99% 100% Full-time Employees (n = 4,182) 1% 2%4%12%78% Part-time Employees (n = 3,470) 66%3%5%1%2%3%4%16%

18. In collaboration with and commissioned by MassMutual Which of the following is closest to your job title? 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 18 n = 4,394

19. In collaboration with and commissioned by MassMutual Demographics: Organization Staff Size 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 19 n = 4,382

20. In collaboration with and commissioned by MassMutual Demographics: Organization Profit Status 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 20 n = 4,402

21. In collaboration with and commissioned by MassMutual Demographics: Organization Region 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 21 n = 4,106

22. In collaboration with and commissioned by MassMutual Demographics: Organization Industry 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 22 Percentage Manufacturing16% Wholesale and Retail Trade14% Financial Services A 10% Professional, Scientific and Technical Services8% Energy, Gas, Oil B 6% Telecommunications6% Accounting / Architectural C 4% Computer and Electronic Products/Technology D 4% Health Care Services E 4% Utilities4% Information Services F 3% Pharmaceutical and Medicine G 2% Law Firms and Legal Services2% Physician and Dental Offices1% Other industries16% n = 4,402 A Includes Banks, Insurance Companies, Securities and Commodities, Other Finance and Insurance Services categories. B Includes Energy Extraction and Refining, Gas and Oil, and Other Oil, Gas, and Energy Extraction and Refining categories. C Includes Accounting, Tax, Payroll Services and Architectural, Engineering categories. D In the survey labeled as Manufacturing: Computer and Electronic Products/Technology. E Includes Hospitals and Other Health Care Services categories. F Includes Publishing, Motion Picture, Broadcasting (except Internet) and Other Information Services categories. G In the survey labeled as Manufacturing: Pharmaceutical and Medicine category.

23. In collaboration with and commissioned by MassMutual U.S.-based operations only66% Multinational operations34% Single-unit organization: An organization in which the location and the organization are one and the same. 26% Multi-unit organization: An organization that has more than one location. 74% Multi-unit headquarters determines HR policies and practices 64% Each work location determines HR policies and practices 4% A combination of both the work location and the multi-unit headquarters determines HR policies and practices 33% Is your organization a single-unit organization or a multi-unit organization? For multi-unit organizations, are HR policies and practices determined by the multi-unit headquarters, by each work location or by both? Does your organization have U.S.- based operations (business units) only, or does it operate multinationally? n = 4,387 n = 4,398 Note: n = 3,410. Percentages do not equal 100% due to rounding. Corporate (companywide)74% Business unit/division15% Facility/location11% n = 3,407 What is the HR department/function for which you responded throughout this survey ? Demographics: Other 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 23

24. In collaboration with and commissioned by MassMutual Response rate = 10% 4,402 HR professional respondents from a randomly selected sample of a variety of industries in SHRM’s membership Margin of error +/- 2% Survey fielded: July 10, 2012 to August 3, 2012 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 24 SHRM Survey Findings: 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income In collaboration with and commissioned by MassMutual Survey Methodology

25. In collaboration with and commissioned by MassMutual 25Disability and Executive Benefits Survey ©SHRM 2012 About MassMutual Founded in 1851, MassMutual is a leading mutual life insurance company that is run for the benefit of its members and participating policyholders. The company has a long history of financial strength and strong performance, and although dividends are not guaranteed, MassMutual has paid dividends to eligible participating policyholders every year since the 1860s. With whole life insurance as its foundation, MassMutual provides products to help meet the financial needs of clients, such as life insurance, disability income insurance, long term care insurance, retirement/401(k) plan services, and annuities. In addition, the company’s strong and growing network of financial professionals helps clients make good financial decisions for the long-term. 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 25

26. In collaboration with and commissioned by MassMutual 26Disability and Executive Benefits Survey ©SHRM 2012 About SHRM The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Representing more than 250,000 members in over 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China and India. 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 26

27. In collaboration with and commissioned by MassMutual 27Disability and Executive Benefits Survey ©SHRM 2012 For more survey/poll findings, visit www.shrm.org/surveyswww.shrm.org/surveys For more information about SHRM’s Customized Research Services, visit www.shrm.org/customizedresearch www.shrm.org/customizedresearch Follow us on Twitter @SHRM_Research@SHRM_Research 2013 Employer Perspectives on Disability Benefits—Supplemental Plan/Individual Disability Income ©SHRM 2013 27 About SHRM Research