Your Likelihood of Disability Before you Retire

For many American families, the possibility that a breadwinner will become disabled is among the most devastating financial risks that can befall them. In some cases, the purely financial consequences of a severe mid-career disability can be more significant than the death of a breadwinner. This is because life insurance policies don’t pay out in the event of a disability not likely to result in death, and also because a disabled person still requires food, clothing, shelter and care, including medical care – and all these things require money that must come from somewhere.

Disability income insurance, of course, exists to replace the essential income an individual earned prior to becoming disabled. A typical disability policy may replace between 50 percent and 65 percent of pre-disability earnings – tax free if the individual also paid the premiums for his or her policy. That’s not enough for everything, but it’s normally enough to provide for the essentials, while still providing an incentive to get back to work.

Disability insurance premiums can be significant – often between 2 and 4 percent of income and sometimes more than that, depending on age, medical history, amount of coverage and the details of the policy. But is it worth it? Consider these facts, compiled by the Council for Disability Awareness:

  • Any given 20-year-old has a 1 in 4 chance of becoming disabled prior to reaching retirement.
  • About 12 percent of the population – some 37 million Americans, are classified as disabled.
  • 5 percent of the work force – 1 in 20 – were receiving Social Security Disability Benefits as of the close of 2012.
  • Half of them – 2.5 million, were in their 40s or younger and receiving SSDI benefits.
  • One worker out of every eight will be disabled for five years or longer during his or her career.
  • The majority of all personal bankruptcies filed – 62 percent – listed medical debt or medical problems as a contributing factor in 2007.
  • Most disability insurance claimants are women. 56 percent of new claims approved in 2013 were for women beneficiaries. Women are at significant risk of disability relating to child-bearing and childbirth, for example.


Think your workers compensation insurance is likely to cover your disability? Think again. Workers compensation only covers injuries arising directly from work-related causes and incidents. That’s only about 5 percent of the total number of disabilities. Your workers compensation insurance generally will not cover you in 19 out of 20 disability cases.

Not all disabilities are total and permanent. But they can still play havoc with your ability to earn a living, as well as your family’s savings. The average individual disability claim lasts for 31.6 months

Top Causes of Disability

Musculoskeletal system and connective tissue disorders account for about 29 percent of new disability claims each year.

Cancer is the 2ndleading cause of new disability claims (15.1 percent) and the fourth leading cause of ongoing claims, according to the Council for Disability Awareness 2014 CDA Long Term Disability Report.

Other top causes of new claims include:

  • Injuries and poisoning (10.3 percent)
  • Mental illness/disorders (8.3 percent)
  • Cardiovascular and circulatory problems (8.7 percent)

Nervous system related disorders account for 7.7 percent of new cases, but 15.2 percent of existing/ongoing claims, making them the 2ndleading cause of ongoing disability.

Calculate Your Own Chances of Becoming Disabled

The Council for Disability Insurance has created an online tool to help you assess the statistical probability that you will eventually become injured or sick and unable to work, based on your age, weight, profession, sex, and a few other factors. To use this tool, the Personal Disability Quotient Calculator, click here.

In most cases, it’s clear that a relatively small disability insurance premium looks affordable, compared to the devastating potential consequences of becoming disabled and unable to work.


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