Disability insurance is most often overlooked as unnecessary - most people think they don't need it. Statistics suggest you should reconsider, especially if your employer picks up the tab for the coverage. However, as an employer sponsored benefit, we are seeing a decline in disability insurance offerings.

According to the Employers Association of the Northeast Health Insurance and Benefits annual survey, employers offering long-term disability insurance to their employees dropped from 83.5% in 2013, to 74.2% in 2015.

Disability insurance policies cover loss of income while one is unable to work due to illness or injury. The portion of income replaced by disability insurance will vary bybroken leg cast disability policy and/or provider, as does the length of coverage under a short term policy and a long term policy. Short term coverage typically lasts between 3-6 months and long term policies typically cover disability lasting six months or more.

Imagine four workers in their early twenties standing shoulder, with at least 46 years ahead of them until retirement. Now, imagine that one of them will not reach retirement without becoming disabled. This is the reality based on statistics from the Social Security Administration.

Are you well beyond your twenties and thinking your chances are reduced? Sorry, think again. The Insurance Information Institute reports that 43% of all people age 40+ will have a long-term (lasting 90 days or more) disability event by age 65.

Let's look at some other statistics from the Council for Disability Awareness:

  • Less than 5% of disabling accidents and illnesses are work related. The other 95% are not, meaning Workers' Compensation doesn't cover them.
  • Approximately 90% of disabilities are caused by illnesses rather than accidents.
  • 65% of working Americans say they could not cover normal living expenses even for a year if their employment income was lost; 38% could not pay their bills for more than 3 months. 
  • Medical problems contributed to 62% of all personal bankruptcies filed in the U.S. in 2007, a 50% increase since 2001.

Yet, 69% of workers in the private sector have no private long-term disability insurance.

If you are lucky enough to enroll in employer sponsored coverage, perhaps these statistics will help you with your decision. If your employer is among those who do not offer disability coverage, or even more important, if you are self-employed, you have the option to purchase private disability insurance.

Consumer Reports discusses the benefits further in the 2015 article, Disability Insurance Can Protect Your Income in a Health Crisis.

For a personalized risk of disability assessment, to calculate your own Personal Disability Quotient (PDQ), go to: www.whatsmypdq.org.

At Great Bay Insurance Agency, we offer short-term and long-term disability insurance solutions from a number of providers. Our agents are experienced with helping our clients determine their coverage needs to provide suitable options within their budget. Call us today for a free consultation at 603.743.4247.