Disability Insurance Awareness Month – Only 20% of Consumers Own Disability Insurance Despite Almost Half Saying They Need It

According to LIMRA research, paying for basic living expenses if one becomes disabled is one of the top five financial concerns consumers have, but 8 in 10 consumers don’t own disability insurance. The Council for Disability Awareness reports the average 20-year-old worker has more than a 25% chance of becoming disabled before they retire. LIMRA finds most workers underestimate this risk with half of employees (49%) predicting their own risk of disability at just 10% or less.

LIMRA research shows only 1 in 5 consumers own disability insurance despite almost half (48%) saying they believe they need it – a drop of 11 percentage points from 2012. The most frequent reasons consumers give for not buying disability insurance are a lack of knowledge and indecision.

LIMRA tested consumers’ knowledge of disability insurance – just 4% of Americans demonstrated a high level of knowledge about disability insurance. Even among those who have the coverage, only two-thirds can identify the type of protection disability insurance provides.

More than 4 in 10 U.S. employers offer short-term or long-term disability insurance. Yet more than a third of employees who have access to disability insurance through the workplace choose not to participate. Nearly 6 in 10 workers who opt out claim they don’t need the coverage or that it isn’t worth the cost. But LIMRA research finds 75% of employees say they would have trouble paying for basic living expenses after several months if they became disabled and were unable to work – one third of employees say they would have immediate trouble.

For those with short-term coverage at work, only 43% understood the benefit could be used for leave after childbirth. Pregnancy is the number one reason people file short-term disability claims and complications from pregnancy is the third most common cause of long-term disability claims, according to the Council for Disability Awareness.

During Disability Insurance Awareness Month, LIMRA joins the industry to remind Americans about the importance of having disability insurance coverage to protect their income if they become disabled and are unable to work.