The Forgotten Risk

Date Posted: 8/1/2013 1
Author: Donna Losch
Death is inevitable, disability isn't. That's why many more people buy life insurance than disability insurance. Yet, for most people between the ages of 20 and 65, the risk of disability is far greater than the risk of death.

Why You Need Disability Insurance
Financially, disability can be a disaster if you don't have disability insurance. If you are disabled, you lose your earning power, but your living expenses don't change. Disability also may come with enormous costs for medical care and rehabilitation.

The purpose of disability insurance is to offset some of those costs and to protect you and your family from financial ruin, by giving you time to recover your health and livelihood or to make arrangements for long-term care.

Your Risk of Disability
According to the National Association of Insurance Commissioners, 25 percent of 35-year-olds (one in four) will experience at least one period of disability during their careers, which will make it impossible for them to work and earn a living for 90 days or longer.

And as people age, their disability risk increases.

Three out of 10 working people (30 percent) between the ages of 35 and 65 will be disabled for at least one period of 90 days or longer. But long-term disability is not restricted to older people. Nearly one in five people (almost 20 percent) will become disabled for five years or more before they turn 65.

Disability Insurance: Death vs. Disability
The risk of long-term disability is also increasing across the board. A two-decade study reported in Health and Society (1984) showed a 32-percent reduction in mortality from the four leading causes of death—heart disease, hypertension, cerebrovascular diseases and diabetes—but the risk of disability increased 55 percent during the same 20-year period.

Long Life and the Need for Disability Insurance
As longevity has increased, so has long-term disability. Medical science and technology have made dramatic improvements in our ability to prolong life. Innovations such as bypass surgery, angioplasty, organ transplants and new cancer treatments mean that many people with serious illnesses are living longer, but many are living with disabilities.

How Disability Happens
Anyone can become disabled at any age—and at any time. An automobile accident, a weekend sports injury, a household mishap, and a wide range of chronic or sudden illnesses can create a short- or long-term disability that makes it difficult or impossible for you to work.

Yet many people are surprised to learn that accidents cause relatively few disabilities. According to research conducted by a leading disability consulting firm and published in the JHA 2002 Group Disability