Survey Finds Workers View Protecting Valuable Possessions as More Important Than Protecting What Pays for Them: Their Paychecks

ARLINGTON, Va., May 3 /PRNewswire/ -- If you own a car, you need car insurance. If you have a home, you need homeowner's insurance. If you have a job, you need disability insurance – or do you? According to a new survey from the nonprofit LIFE Foundation, Americans seem much more inclined to insure their cars and homes than what pays for them—their paychecks. While 84 percent of Americans "strongly agree" that you need to insure your car, and a similar number (80 percent) feel it's critical to have homeowners insurance, only 48 percent say that it's imperative to have disability insurance if you have a job.

Disability Insurance Often Misunderstood, Overlooked

Disability insurance provides replacement income when someone is unable to work due to a disabling illness or injury—an important financial safety net to be sure, but a quarter of workers don't even know if they have this important coverage through their jobs, the survey points out. And of the 41 percent of workers who say they do have coverage through work, many appear mystified as to the exact benefit. When asked what percentage of their salary they would receive if they were to become disabled, nearly four in 10 workers (39%) do not know. One in five (22%) appear to overestimate their coverage, thinking they would receive anywhere from 70 to 100 percent of their current salary, when, with few exceptions, disability insurance policies replace no more than two-thirds of a worker's pre-disability salary.

"If your paycheck were to suddenly disappear due to an illness or injury that prevented you from working, disability insurance is your financial life-line, and yet most Americans lack this essential coverage," said Marvin H. Feldman, CLU, ChFC, RFC, president and CEO of the LIFE Foundation. "Americans need to wake up to the reality that their paychecks are the most valuable assets they possess, and they need to be insured in the same way they insure their homes and their cars. If you work for a living, you need disability insurance—it's that simple."

"Paycheck Challenge" Asks People to Explore Where Their Paychecks Go

The LIFE Foundation released these survey findings to coincide with the kick-off of Disability Insurance Awareness Month, a national campaign designed to get workers to take stock of their disability insurance needs. To get workers to focus on where their hard-earned money goes each month and the importance of protecting their income with disability insurance, the LIFE Foundation is sponsoring the "Where Did My Paycheck Go?" Challenge throughout May. The Challenge asks people to rank the seven biggest expenditures in their monthly budgets. One respondent will be chosen at random to receive a $1,000 bonus paycheck. To participate in the Challenge, visit www.protectyourpaycheck.org.

"During Disability Insurance Awareness Month, our goal is to focus workers on how important their paychecks are to their ability to maintain a decent quality of life for themselves and their loved ones," said Feldman. "Once people come to the realization that their paycheck is their most valuable asset, then it's only logical for them to explore how disability insurance can protect it."

Tips for Getting Disability Insurance Coverage

According to the Bureau of Labor Statistics, only 29 percent of workers have long-term disability insurance coverage. If you're one of the millions of workers who lacks coverage or needs more coverage than you currently have, LIFE has these suggestions on how and where to get it:

At work: Your employer may provide short- and/or long-term group disability insurance coverage at no cost to you, but it's important to find out what kind it is and the amount of the benefit. You may have the option to increase your coverage, often at an affordable rate. If your employer doesn't provide this group benefit, it may offer a disability benefit under a voluntary arrangement. Although you pay the full cost of the benefit, it is typically easier to qualify for and less expensive than an individual policy. Your benefits manager or human resources administrator can help you understand your options.

Through a professional organization: Many professional associations offer their members the opportunity to purchase disability insurance through a group plan. It is generally less expensive than an individual policy, but keep in mind that the association could drop the coverage, or you might change professions, thus losing the benefit.

On your own: You can purchase an individual disability insurance policy through a qualified insurance professional in your community.  With an individually purchased policy, you don't need to worry about losing coverage if you change jobs, and you can consider policies from a multitude of insurance companies, not just the one carrier with which your employer is contracted.

For more information on disability insurance, visit www.protectyourpaycheck.org.  

About the LIFE Survey

The LIFE Survey was conducted by Kelton Research between April 14-21, 2010. The survey polled a nationally representative sample of 587 employed Americans, ages 18 and older, using an online questionnaire. The survey has a margin of error of +/- 4 percent.

About Disability Insurance Awareness Month

Disability Insurance Awareness Month (DIAM) was created to get American workers to think about the need to protect their greatest asset – their ability to earn an income. Observed in May, DIAM is an industry-wide effort that is coordinated by the nonprofit LIFE Foundation. More information is available at www.lifehappens.org/diam.

About LIFE

The Life and Health Insurance Foundation for Education (LIFE Foundation) 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 products that best fit their needs. To learn more about these topics, please visit www.lifehappens.org.

SOURCE LIFE Foundation