ARLINGTON, Va., May 1, 2012 /PRNewswire/ -- What would you do if you suddenly became ill or injured and could no longer work for a living? With so many people relying on every paycheck to make ends meet, not having an income, even for a short period of time, could be financially devastating. According to new research from the nonprofit LIFE Foundation, nearly one in four working Americans say they would have trouble supporting themselves financially "immediately" following a disability that keeps them out of work. Half would find themselves in financial trouble in one month or less.
Today, nearly 3 in 4 Americans (75 percent) say they are concerned about being able to support themselves financially should they become disabled and unable to work. In fact, Americans are more concerned with having to face this reality than they are about paying their mortgage or rent, paying off credit card debt or losing money on investments. Yet, just 31 percent of workers say they own disability insurance – the very product that could guarantee their financial security.
"There's a three in ten chance that a person will suffer a disability that could keep them out of work for three months or more, yet very few people have a plan for that eventuality," said Marvin H. Feldman, CLU, ChFC, RFC, president and CEO of the LIFE Foundation. "An injury or illness doesn't have to result in a financial crisis, but that's precisely what can happen when you haven't planned ahead with disability insurance."
Understanding the Need for Disability Insurance
Disability insurance is arguably the most overlooked of all the major types of insurance and a lack of understanding about the product may be contributing to people not getting the coverage they need. If you work for a living, you need disability insurance, yet only half of working Americans say they personally need the coverage. In addition, 34 percent of people who do not have a job say they need disability insurance, a clear indication that many Americans do not understand that the product provides replacement income in the event of a disability that prevents a person from working.
Many people don't consider their paycheck to be their most valuable asset. LIFE asked consumers about three assets that most people generally value and appreciate, and found that more than half of all working Americans (54 percent) agree that their home is one of the things they appreciate most in life, compared to 42 percent who appreciate their paycheck and 32 percent who appreciate their car.
"If you think about it, your paycheck is really your most valuable asset because without it you wouldn't be able to pay your mortgage or make your car payments," noted Feldman. "So just like you protect your home with homeowner's insurance or your car with auto insurance, you need to protect your paycheck with disability insurance."
To help educate working Americans about their coverage needs, LIFE is once again coordinating Disability Insurance Awareness Month in May, focused on the message that consumers need to protect their paychecks with disability insurance. As part of the campaign, LIFE is sponsoring the "I Love My Paycheck" photo contest asking people to complete the sentence "I love my paycheck because …" and then submit a photo that describes who or what is shown. The contest will run throughout May on LIFE's Facebook fanpage, with a winner chosen at the end of the campaign to receive a new Apple iPad.
Disability Insurance 101
If you work for a living but don't know if you have disability insurance or how to assess your needs, LIFE has created a new education site at www.protectyourpaycheck.org that includes interactive resources and helpful tips. To get started, LIFE offers answers to some of the most common disability insurance questions:
What is disability insurance? Disability insurance replaces a portion of your income if you were to become ill or injured and unable to work for a given period of time, even if the incident happens while you are away from work. Think of it as insurance for your paycheck.
Who needs disability insurance? A good rule of thumb is that if you work for a living, you need disability insurance. It's that simple.
Do I still need coverage if I don't work in a dangerous profession? Regardless of your profession, the odds of suffering a long-term disability are high for all workers because illness – not accidents – account for the vast majority of disabilities that keep people out of work.
Where can I get disability insurance? The main source of disability insurance in the U.S. is coverage provided or sponsored by your employer. Find out if your employer provides short- and/or long-term disability insurance, and whether you have the option to increase that coverage. Professional associations may also offer their members the opportunity to purchase disability insurance through a group plan. You also have the option of purchasing disability insurance on your own with the help of an insurance agent in your community.
How much disability insurance do I need? To get a sense of how much disability insurance you may need, visit the nonprofit LIFE Foundation's Disability Insurance Needs Calculator at www.protectyourpaycheck.org/calculators.
About the Research
LIFE recently conducted two pieces of research to better understand consumers' perceptions about disability insurance.
The nationwide Insurance Barometer Study is an annual study conducted by LIFE and LIMRA to better understand the public's opinions, attitudes and behaviors regarding a host of insurance and financial planning matters. The online survey was fielded in January 2012 by Harris Interactive. The 2,011 respondents were between ages 18 and 75 and shared or were the sole decision maker for financial matters in the household. The margin of error in this study is +/- 2 percentage points or less.
A LIFE Survey conducted by Kelton April 18th – April 25th, 2012 polled a nationally representative sample of 489 employed Americans, ages 18 and older, via email invitation and an online survey. The survey has a margin of error of +/- 4.4 percent.
About Disability Insurance Awareness Month
Disability Insurance Awareness Month (DIAM) was created to get American workers to think more about the need to protect their greatest asset – their ability to earn an income. Held in May, DIAM is an industry-wide effort that is coordinated by the nonprofit Life and Health Insurance Foundation for Education (LIFE).
The Life and Health Insurance Foundation for Education (LIFE) was founded in 1994 in response to the public's growing need for information and education on life, health, disability and long-term care insurance. LIFE also seeks to remind people of the important role insurance professionals perform in helping families, businesses and individuals find the insurance solutions that best fit their needs. To learn more about these topics, please visit www.lifehappens.org.
SOURCE The Life and Health Foundation for Education (LIFE)