Employee Life and Disability Insurance

Is Disability Insurance Necessary?

In a 2018 study, the Council for Disability Awareness (CDA) estimated that 1 in 3 working Americans have no disability insurancce coverage, short- or long-term. A 2019 study of consumer bankruptcy filings, published in the American Journal of Public Health, found that 44.3% of those filings were due to medically-related work loss.

So, is disability insurance necessary? Take a look at some of the statistics:

• According to U.S. CDC data, you have a 24% chance of becoming disabled.
• The American Council of Life Insurers (ACLI) suggests that a 35-year-old person is 6 times more apt to become disabled than die before the age of 65.
• According to the Social Security Administration, 25% of 20-year-olds will become disabled prior to the age of 67.
• At age 30, you have more than a 50% chance of being disabled for three months or longer before you turn 65, according to the Council for Disability Awareness. One in seven U.S. workers is disabled for five years or more.
• According to the CDA, most disabilities are not work-related, meaning they are not covered by Workers' Compensation.

The numbers are frightening. Disability is often referred to as a "living death." Like death, disability can be emotionally and financially devastating. Preparation is not only beneficial, but crucial. While it's not a popular topic, disability is a reality for many Americans.

If everyone had a plush savings account, there wouldn't be a problem. But most do not, and for most Americans, their savings account, retirement savings, etc. won't support them forever. That's why disability insurance is so important. But individual policies are neither inexpensive nor easy to qualify for. An employer-provided policy can often be the best bet.