LIMRA Data

6 in 10 Americans Believe People Need Disability Insurance...

…but only 26 percent own it

 Sixty-one percent of Americans believe most people need disability insurance, yet only 26 percent said they owned any, according to the 2015 Insurance Barometer Study conducted by LIMRA and Life Happens.

According to Social Security Disability Insurance (SSDI) statistics 1 out of 4 of today’s 20 year-olds will suffer a disability before they retire. On average, a disabling injury or illness keeps people out of work for three months or more.

Each May, Disability Insurance Awareness Month is an effort to inform people about the importance of protecting their paycheck in the event they are unable to work due to a disabling injury or illness.

One third cannot afford it

The Council for Disability Awareness (CDA) reports that one third of people said they cannot afford disability insurance. When asked what they think it costs, women estimated $50 a month on average and men said $60 a month. On an annual basis that converts to $600 and $720, respectively.

The latest LIMRA Group Disability Survey found annual plan costs tend to range from $200-$300 on average. In fairness, workers often don’t know the cost of a policy because so much of it depends on individual factors, such as age, salary, etc. and the extent to which their employer participates in the costs.

One third of people said they would consider disability insurance if they knew more about it. This is where advisors can play an important role to help clients better understand disability insurance and determine the right amount of coverage for their situation. Disability Insurance Awareness Month remains an important effort to remind Americans about the importance of protecting their paychecks.

Excerpts from the study:

  • Myth
    The chances of becoming disabled are slim, around one in one hundred chance.
    Fact
    The Social Security Administration estimates that one in four 20 year-olds in the workforce today will suffer a disability before they retire. A LIMRA study found 6 in 10 Generation X and Y consumers said an income loss due to illness or injury would have a significant financial impact on their households.
  • Myth
    Most disabilities are caused by catastrophic, one-time events, such as serious accidents or injuries.
    Fact
    Insurance statistics show that only nine percent of long-term disabilities actually resulted from serious accidents. Social Security Disability Insurance (SSDI) statistics show more than one third of workers receive benefits for “musculoskeletal” issues. The most common examples of these are back problems, joint pain and muscle pain.
  • Myth
    Disability insurance isn’t as essential for women because men are more likely to become disabled.
    Fact
    The percentage of women who receive benefits as disabled workers has risen steadily over the years. In 1990, 35 percent of women received SSDI benefits, by 2013 the number increased to 48 percent. Since more than 70 percent of American households rely on two incomes, it is important that both men and women protect their income with disability insurance.

For more information, please see the 2015 Disability Insurance Awareness Fact Sheet.