Most American workers are not in a position to cover the financial needs they may face if they are unable to work or face other unexpected financial hardships, according to a research report released today by Prudential Financial Inc. (NYSE:PRU).

The research, published in a white paper called “Financial Wellness: The Next Frontier in Wellness Programs,” found employees are unprepared for three key risks they face in their working years — premature death, illness or injury and out-of-pocket medical and living expenses — and that more than half of U.S. households have less than $10,000 on hand to use in an emergency.

“It’s pretty clear that wellness isn’t just about health, it’s about money too,” said Lori Dickerson Fouché, chief executive officer, Prudential Group Insurance. “Financial wellness isn’t only about preparing for retirement; it’s about preparing for the unexpected that can occur on the path to retirement.”

According to the white paper, the common driver for financial wellness in all three cases is the level of insurance coverage carried by an employee. The challenge for employers is to help their workers determine what they need and how they can take advantage of existing company-paid and voluntary benefit offerings to improve their and their families’ financial wellness.

“All of these risks could easily harm a person financially,” said Fouché. “Yet most people are not ready to handle any one of these three risks let alone all three.”

The 2014 Prudential Financial Wellness research, based on a survey of 5,335 full-time employees with medical insurance, found:

  • In the event of a premature death, the average employee would be able to cover only 71 percent of the financial needs for a spouse’s or partner’s lifetime and for children until adulthood.
  • In the case of an illness or injury where they could no longer work, the average employee’s household would be able to pay 71 percent of their monthly expenses using other income sources, such as spousal or partner income and disability insurance benefits.
  • If they had a critical illness or accident, the average employee’s household is equipped to cover just 48 percent of out-of-pocket expenses through liquid savings and insurance coverage.

Demographics do play a role. The younger the worker, for example, the longer they have to provide for their family should they die. Similarly, the fewer children, the more likely a family can survive financially should a breadwinner die. Households with higher incomes typically have an easier time handling financial adversity.

“When burdened by financial worries, workers become less productive,” said Fouché. “What this tells us is we have a significant opportunity to improve the well-being and productivity of American workers.”

The white paper points out the three key financial risks employees face are insurable. Employers can improve the financial health of their workers with targeted, needs-based financial wellness programs that provide the benefit programs and analytical tools they need.

Employers can do this by offering a broad array of insurance programs — such as life, disability, and, among other offerings, accident insurance and critical illness coverage — that can address many of the financial risks employees face every day when paired with medical insurance, according to the white paper.

Prudential has also identified a fourth risk – outliving assets in retirement. While the report does not cover this risk due to its longer-term nature and occurrence during retirement years, research continues into its role in financial wellness. For more information on financial wellness, visit www.prudential.com/financialwellness.

Prudential Group Insurance manufactures and distributes a full range of group life, long-term and short-term disability and corporate and trust-owned life insurance in the U.S. to institutional clients primarily for use in connection with employee and membership benefit plans. The business also sells critical illness, accidental death and dismemberment and other ancillary coverages and provides plan administrative services in connection with its insurance coverages.

Prudential Financial, Inc. (NYSE:PRU), a financial services leader, has operations in the United States, Asia, Europe and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit http://www.news.prudential.com/.

Group coverages issued by The Prudential Insurance Company of America, 751 Broad Street, Newark, NJ 07102.

© 2015 Prudential Financial, Inc. and its related entities. Prudential, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.

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