Illness or injury—and the accompanying financial challenges—can happen to anyone.
If you count on your paycheck, a lengthy work absence will pose a serious financial challenge. The first options to cover bills are usually sick time and paid time off provided by an employer. However, if you can’t perform your job for 3-6 months, you may stop getting a paycheck. What then? Most workers aren’t prepared financially to miss work, yet the chance of it happening to any of us is much higher than most realize.
If you don’t have disability insurance, it might not seem pressing, but things can get very real, very fast without it. It’s one of the most critical safety nets you can have. It’s the best way to protect your income.
Accidents Happen.
Most work absences are caused by illness or injury. A back injury, cancer, or a serious mental health challenge can happen to anyone at any time. How would you cover your bills if you suddenly became unable to work due to an accident or illness? That’s what disability insurance is for. It provides a portion of your income if you can’t work for weeks or months. It’s a safety net for financial well-being.
Facing The Odds.
National statistics show that one in four workers will face an accident or illness during their lifetime that keeps them out of work for at least one year.1 That number may sound high, but they’re a reality for many of us. The financial consequences of lacking income protection can be severe.
The Risk of Bankruptcy.
Loss of income is the leading cause of personal bankruptcy in America.2 A study found that 44% of people who filed for bankruptcy reported that medical issues contributed to their loss of work.3 This statistic doesn’t even count for those who face bankruptcy due to overwhelming medical bills.
The Personal Savings Crisis.
A staggering 37% of American adults say they couldn’t handle an unexpected $400 bill without using credit cards or loans. Additionally, nearly 20% of households report having savings of $100 or less.4 Too many people live paycheck to paycheck, and the loss of income can devastate them and their families.
Millions at Risk.
At least 51 million working adults in the United States are without disability insurance other than the basic coverage available through Social Security.5 This significant gap highlights the financial vulnerability that millions of people face every day.
Why Aren’t Workers Covered?
While many large companies provide short-term and long-term disability insurance, some only offer it as an employee-paid option. Typically, the cost of long-term disability insurance ranges from 1% to 3% of your salary and covers between 60–80 percent of your income.6 Some companies offer disability coverage but fail to promote it effectively. It’s important to ask your employer about the disability insurance options at your workplace.
- SSA, Disability and Death Probability Tables for Insured Workers. 2023. https://www.ssa.gov/oact/NOTES/ran6/an2023-6.pdf
- Getting Paid in America. 2023. https://info.payroll.org/pdfs/npw/2023_Getting_Paid_In_America_survey_results.pdf
- National Library of Medicine, Medical Bankruptcy: Still Common Despite the Affordable Care Act. 2019. https://ascopubs.org/doi/full/10.1200/JCO.21.01636
- Board of Governors of the Federal Reserve System, Report on the Economic Well-Being of U.S. Households in 2022-May 2023. https://www.federalreserve.gov/publications/2023-economic-well-being-of-us-households-in-2022-expenses.htm
- According to ACLI analysis of 2022 U.S. Census data and Strategic Business Insights 2020 MacroMonitor Household Survey, 53.7% of non-retired households (51.2 million in total) did not report having disability insurance. Assuming there is at least one adult in each household, this means the number of “uncovered” adults is at least equal to the number of “uncovered” households. (Source: Andrew Melnyk, Chief Economist, ACLI. https://impact.acli.com/author/andrewmelnyk/).
- Disability insurance rates: The cost of long term insurance. https://www.guardianlife.com/disability-insurance/long-term-disability-insurance-cost
