The Truth About Disability Insurance: Yes, You Really Do Need It

Over the past year, more people are faced with the challenge of earning an income during an illness or injury that has kept them out of work for an extended period, answering the age-old question: “Do I really need disability insurance?” 

May is Disability Insurance Awareness Month, and yes, you do need disability insurance. According to Council of Disability Awareness Director of Operations Fred Schott, “50 million Americans lack disability insurance”, a shocking statistic especially when considering that 1 in 4 of today’s 20 year-olds will face a disability over the course of their careers before retirement. 

Now is the perfect time to kickstart your understanding of disability insurance and ensure adequate income in the event of an illness or accident. 

Why do so many Americans lack disability insurance? 

One major factor holding people back from purchasing disability insurance is the tendency to underestimate the likelihood of disability. Each year around 5% of working Americans will experience a short-term disability (six months or less) due to illness, injury, or pregnancy. What’s more, 90% of disabilities result from illnesses, not injuries. The Council for Disability Awareness says that “back injuries, cancer, heart disease and other illnesses cause the majority of long-term absences.” 

Many people also assume they’re already covered, either through workers’ compensation or Social Security Disability Insurance, both of which have their limitations. A person qualifies for workers’ compensation only if they become disabled while on the job and qualifying for Social Security Disability Insurance can be challenging. From 2009 to 2018, only 32% of Social Security Disability Insurance (SSDI) claimants had their applications approved. 

So, what now? 

Understanding the fundamentals, such as budgeting, money management and saving, are all part of an equation to identify risk and then protect oneself and one’s family. 

Many employers offer disability insurance as part of their benefits package. If you’re employed, check out what your employer offers. If disability insurance is an option through work via a group plan, that’s a great option. If your employer doesn’t offer any disability insurance, consider purchasing disability insurance through a private company that sells individual policies or through an association or affinity group to which you belong. 

While cost may be a top concern for many, the price you pay depends on a wide range of factors, including individual circumstances (i.e. health history, job) and the type of policy.  

A financial professional can help you better understand different disability insurance policy options and find the one that’s right for you and your situation. With the appropriate coverage, you can make sure your income is secure should you fall victim to an illness or injury. 

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