Broker Check

What Are The Facts Please?

by Steve Crawford

Think You Will Never Suffer A Long Term Disability?

I'm a firm believer in odds, I generally don't make a personal or business decision until I understand the odds, and whether or not they are in my favor. So when I evaluated buying my own disability insurance policy several years ago, I wanted to know what the odds were of me suffering a long term disability during my working years. Let's just say it didn't take long for me to sign an application to begin the underwriting process.

According to the Social Security Administration, more than 1 in 4 of today's 20-year olds can expect to be disabled and out of work for at least a year before they reach retirement.1

What about Social Security Disability Income (SSDI)? Well, as of January 2018, the average payment to disabled persons was only $1,197/month.2 Can you live on less than $15,000 per year?

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Why is this article written? Because in 2017, The American Council of Life Insurers released a report that indicated that over 54% of non-retired households had no disability insurance other than what was provided by SSDI. Additionally, the Federal Reserve Report on the Economic Well-Being of US Households in 2016 found that less than half of adults could cover 3 months of expenses in the event of a disability. This shows me that people don't have a clue just how vulnerable they are, or their perception is a perception not based in reality. A perception not based on reality is extremely dangerous, and until somebody shakes that reality up for you (the goal of this article), the only way you discover your mistake is when it is already too late.

What Causes a Disability?

I don't know how many times I have heard people say, "I don't need anything fancy for disability insurance, I just need a basic contract. I only need my brain and my hands to do my job." Again, this is a perception not based in reality. The reality is that 90% of all disabilities are caused by illness, not accident.3 An illness does not care what you do for a living, a cardiovascular event will hit a computer consultant the same way it hits an attorney.

Disability insurance truly is a foundation product, it can be the foundation of a solid financial strategy. Should you suffer a long term disability that lasts 90 days or more, odds are that you will be disabled for almost 3 years3. You have just read the most current statistics offered regarding just how vulnerable you are to a long term disability eroding everything you have ever saved. The only question remaining is, "Are you going to remain one of the 51 million people4 who does not own disability insurance?"

Social Security Administration, Disability and Death Probability Tables for Insured Workers Born in 1997, Table A.
2 ASPE, Poverty Guidelines 2018
3 Council for Disability Awareness
4 American Council of Life Insurers

These are the personal views of the author and do not necessarily reflect the views and opinions of The Guardian Life Insurance Company of America or its subsidiaries and affiliates thereof.