Disabilities happen and chances are you or someone you know will have a disability before you retire. Protect your income and possibly get your money returned if you don’t.
10 Disability Insurance Statistics
1. Most Americans are better prepared financially to die than to become disabled, although the chances are at least three to five times greater of a disability occurring.
2. A 35-year-old has a 50 percent chance of becoming disabled for a 90-day period or longer before age 65. About 30 percent of Americans ages 35-65 will suffer a disability lasting at least 90 days during their working careers. About one in seven people ages 35-65 can expect to become disabled for five years or longer.
3. More than 375,000 Americans become totally disabled every year, and approximately 110 million Americans don’t have long-term disability coverage. Approximately 8 million adults have some disability that limits or prevents them from working.
4. Nearly half (46 percent) of all foreclosures on conventional mortgages are caused by a disability vs. only 2 percent are caused by the homeowner’s death.
5. The typical long-term disability policy covers approximately 60 percent of a base salary (does not cover stock options, bonuses, etc.), up to a maximum of roughly $10,000 a month. Benefits from an employer plan may be taxable, unlike individual policies, which avoid such penalties.
6. Most income earners, regardless of income level, have spending commitments that consume 65 percent to 75 percent of normal cash flow. Those commitments mean a prudent person should secure disability income insurance in the amount of at least 65 percent to 75 percent of normal earned income.
7. If you have saved 10 percent of your income each year, one year of being totally disabled could wipe out 10 years of savings.
8. For persons without a disability, the employment rate is 80.5 percent. For those with a severe functional limitation, however, the employment rate is only 27.6 percent.
9. Social Security Disability Insurance is available to people of all incomes, but only if they have worked at least 10 years before becoming disabled. The Social Security Disability Insurance program pays an average of $722 per month, and the disability criteria are so strict that only about 35 percent of those who apply for benefits actually qualify for them.
10. Back disorders are most commonly sited (21 percent) as chronic conditions that cause working limitations, followed by heart disease and arthritis.