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What is Disability Insurance?

Individual disability income insurance is designed for one purpose: to help provide financial security in the event a long-term illness or accident prevents you from earning your ususal income. The statistics below will help you understand the importance of this coverage and the potential problems created if you become disabled and are not insured with disability insurance. With this coverage your future earnings can be protected should disability strike. While you recuperate, a steady stream of monthly income can help offset the mounting financial strain associated with loss of income combined with unanticipated expenses.

What have you done to protect your lifestyle in the event a disabling accident or illness prevents you from earning a living?

Individual Disability Insurance helps you protect your most valuable asset – your ability to work and earn an income. The following statistics support and describe the need for disability insurance protection.
These statistics were gathered from credible third-party sources. We also provide a calculator that will help you determine your own need for disability insurance. Search for statistics by clicking on the categories below:

• Need for Income Protection
• Causes of Disability
• Disability Duration
• Disability Costs
• Misconceptions

Need for Protection

A disability can happen to anyone…at any time.

• At age 40, the average worker faces only a 14 percent chance of dying before age 65 but a 21 percent chance of being disabled for 90 days or more.
  - Insurance Information Institute, www.iii.org November, 2005
• A 20-year old worker has a 30% chance of becoming disabled before retirement age, and only a 17% chance of dying before age 65.
  - Social Security Administration Disability Benefits Publication; National Vital Statistics Report, 1999
• 51.2 million Americans have some level of disability. They represent 18% of the population.
  - U.S. Census Bureau, July, 2006
• The number of disabled workers in America has risen by 35% since 2000.
  - Social Security Administration, 2007
• In 2007, 12.8% of people ages 21-64 surveyed have a disabling illness.
  - U.S. Census Bureau, American Community Survey, 2007
• You have a 1 in 21 chance that you’ll have a disabling accident.
  - 2005 Field Guide to Estate Planning, Business Planning & Employee Benefits, by Donald Cady
• In the U.S., a disabling injury occurs every 1 second, a fatal injury occurs every 4 minutes.
  - National Safety Council®, Injury Facts® 2008 Ed.
• In the last 10 minutes, 498 Americans became disabled.
  - National Safety Council®, Injury Facts® 2008 Ed.
• In the home a fatal injury occurs every 12 minutes and a disabling injury every 3 seconds.
  - National Safety Council®, Injury Facts® 2008 Ed.
• There is a death caused by a motor vehicle crash every 12 minutes; there is a disabling injury every 13 seconds.
  - National Safety Council®, Injury Facts® 2008 Ed.
• Almost 3 in 10 workers entering the workforce today will become disabled before retirement.
  - Social Security Administration, Fact Sheet, January 31, 2007
• In 2007, the employment rate of working-age people with disabilities in the U.S. was 36.9%.
  - U.S. Census Bureau, American Community Survey, 2007
• 43% of all people age 40 will have a long-term disability event prior to age 65.
  - JHA Disability Fact Book, 2006
• A new Harvard University report reveals that 62 percent of all personal bankruptcies filed in the U.S. in 2007 were due to an inability to pay for medical expenses.
  - June 4, 2009. The American Journal of Medicine
• Unfortunately, most Americans have little understanding of the likelihood of experiencing a disability. A recent CDA survey of workers found:
• 90 percent underestimate their own chances of becoming disabled.
• 85 percent express little or no concern that they might suffer a disability lasting three months or longer.
• 56 percent do not realize that the chances of becoming disabled have risen over the past five years.
  - Council for Disability Awareness, 2007 Disability Awareness Survey

Causes of Disability

Illnesses generally cause disabilities, not accidents.

• Over 85% of disabling accidents and illnesses are not work related.
  - National Safety Council®, Injury Facts® 2008 Ed.
• While many people think that disabilities are typically caused by freak accidents, the majority of long-term absences are actually due to illnesses, such as cancer and heart disease.
  - Life and Health Insurance Foundation for Education November, 2005
• Stroke is a leading cause of serious long–term disability.
  - Centers for Disease Control and Prevention, 2007
• Common causes of individual disability insurance claims are:

Disability Duration

An average disability may last longer than you think.

• The average duration of a long-term disability is 30 months.
  - JHA Disability Fact Book, 2006
• Nearly 1 in 5 Americans will become disabled for 1 year or more before the age of 65.
  - Life and Health Insurance Foundation for Education. November 2005
• Three out of 10 workers between the ages of 25 and 65 will experience an accident or illness that keeps them out of work for 3 months or longer.
  - Social Security Administration, Fact Sheet, January 31, 2007
• Nearly 1 in 3 Americans ages 35-65 will become disabled for more than 90 days
  - 2005 Field Guide to Estate Planning, Business Planning & Employee Benefits, by Donald Cady

Disability Costs

Indirect and direct costs of a disability take financial tolls on everyone.

• Off-the-job injuries to workers cost the nation at least $240.3 billion and 225 million days of production time in 2006.
  - National Safety Council®, Injury Facts® 2008 Ed.
• The average disability absence results in payments of $3,800, while lost productivity costs on average over $22,800.
  - Integrated Benefits Institute, IBI News September 8th, 2006
• The "total costs" associated with each disability absence exceeds $35,000.
  - Integrated Benefits Institute, IBI News September 8th, 2007
• Employers spend 4.1% of payroll on unscheduled absences.
  - Marsh/Mercer Health & Benefits, "Health, Productivity and Absence Management Programs", 2006 Survey report
• In 2006, unscheduled absence cost some large employers an estimated $850,000 per year in direct payroll.
  - CCH and Harris Interactive, "2006 CCH Unscheduled Absence Survey," October 2006
• Disabling injuries and illnesses account for 55% of employee absences.
  - JHA 2005 Absence Management Survey, "Big-picture benefits: Integrating FMLA and disability claims data helps reduce absenteeism," by Chris Silva, September 2006
• Just 10% of disability cases account for more than half the total medical and disability costs.
  - Integrated Benefits Institute, IBI News September 8th, 2008

Misconceptions

Common back-up plans to loss of income may not be an option.

• More than 1 in 5 adults believe that unemployment or Social Security will cover them if they become disabled.
  - Disability Literacy: How Consumers Rate Today, April 2005, The Hartford
• Less than half – 39% – of the 2.1 million workers who applied for Social Security Disability Insurance (SSDI) benefits in 2005 were approved.
  - Social Security Administration, Office of Disability and Income Security Programs
• The average monthly SSDI benefit is $1,004.
  - Social Security Administration, Fact Sheet 2008
• In 2007, the percentage of working-age people with disabilities receiving SSDI payments in the US was 17.1%.
  - U.S. Census Bureau, American Community Survey, 2007
• Over 85% of disabling accidents and illnesses are not work related, and therefore not covered by workers’ compensation.
  - National Safety Council®, Injury Facts® 2008 Ed.
• Over 6.8 million workers are receiving SSDI benefits, almost half are under age 50.  This represents only 13% of the over 51 million Americans classified as disabled.
  - Social Security Administration, Fact Sheet 2007