Let’s Get the Facts Straight on Disabilities and the Need for Disability Insurance

If you’re like the typical American worker, you believe your risk of experiencing an income loss as a result of illness or injury is far lower than it actually is. As a result of this misconception. you may not have taken steps to protect your income with disability insurance. Here’s why that’s a mistake.

A 30-year-old earning between $40,000 and $50,000 today will likely earn over $3 million during their working career—if they stay healthy. Failure to protect that most valuable of financial resources, your ability to earn an income, can result in a financial catastrophe.

It’s not what you think

When asked if they know someone who has become disabled, the most common response is “no.” Yet, over 8.9 million American workers, over 5% of the workforce, are receiving Social Security Disability Insurance benefits today, and SSDI is difficult to qualify for. If we change the question to: “Do know someone who has had cancer, a bad back or heart problems,” the response invariably becomes “yes.”

One of the most enduring myths about disability is the average working American’s assumption that disabilities are most likely to be caused by an accident. In the Disability Divide Research Series, conducted by the Council for Disability Awareness, by a wide margin, wage earners said if they were to become disabled, it would likely be caused by a catastrophic accident:

  • 64% of polled employees said, “A disability would cause someone to miss at least a year of work.”
  • An astonishing 31% said a disabled employee would “never return to work.”

This catastrophic perception of disability results in wage earners underestimating their risk of long-term disability. When they realize most disabilities are caused by much more common illnesses, they begin to understand their own risk is higher than they thought.

A disability claim is much more likely to result from an illness diagnosis that is chronic and common.

The facts

Let’s separate fact from fiction. Each year, for the Annual Long Term Disability Claim Review, CDA gathers claim data from participating disability insurers representing a combined insured population of over 30 million workers. An assessment of the over 600,000 disability claims recorded in a given year shows the percentage of active claims that were caused by injuries is consistently below 10%. The remaining 90% or so have causes that are categorized as illnesses. While catastrophic accidents do cause some disabilities, often highly visible ones, a disability claim is much more likely to result from an illness diagnosis that is chronic and common.

The top five causes for all active disability claims in 2012 were as follows:

#1: Musculoskeletal and connective tissue disorders: 30.7% of 2012 long-term disability claims reflected diagnoses in this category. Specific examples include back pain, joint problems; muscle, ligament and joint disorders, arthritis, claims_pie2012degenerative disks, and sciatica.

#2: Nervous system and sense organ-related conditions. These diagnoses represented 14.2% of 2012 claims, and include multiple sclerosis, epilepsy, paralysis, Alzheimer’s, Parkinson’s disease, amyotrophic lateral sclerosis (ALS), eye and ear disorders.

#3: Cardiovascular/circulatory conditions. 12.1% of 2012 claims resulted from circulatory system disorders like hypertension, chronic heart disease, heart attack, stroke, aneurysm and coronary artery disease.

#4: Cancer. Cancer diagnoses such as breast and prostate cancer, lymphoma, Hodgkin’s disease and leukemia were the cause of 9% of 2012 claims.

#5: Injuries. Finally, injuries including fractures, sprains and strains, dislocations, contusions, burns, poisoning and allergic reactions were the diagnoses for 7.7% of 2012 disability claims.

The bottom line is that injuries are in the mix, but the overwhelming majority of disability claims result from common illnesses that are very familiar to nearly every American worker.

Your best financial move is to defend your income with disability insurance.

Sources: The 2013 Council for Disability Awareness Long-Term Disability Claims Review

The Council for Disability Awareness Disability Divide Research Series 2010-2013


by Barry Lundquist

Barry Lundquist’s professional background includes over 35 years of insurance industry operations, sales and executive experience at Paul Revere, Provident and Unum. In 2000, Barry founded consulting firm Eastport Marketing Group to help insurance companies and distributors improve results. Since May of 2009, Barry has served as president of the nonprofit Council for Disability Awareness, located in Portland, Maine.

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