Survey reveals majority of Americans are not taking disability insurance

Dec 3 2009

For most working-age Americans, their greatest asset is the ability to earn an income. It is this ability to earn an income that makes it possible to not only pay today's mortgage but also to plan and save for tomorrow's college and retirement costs.

Yet, according to a Northwestern Mutual survey, only 10 percent of adults age 21 and over have taken measures to protect their income by insuring it in the event of disability, and only 30 percent have disability coverage through their employer. This despite nearly 80 percent of Americans stating they would be devastated if a disability prevented them from earning a living.

"There is a startling disconnect for Americans who recognize the devastating impact of a disability, yet aren't doing anything to protect against that risk," said Stephen Frankl with Northwestern Mutual's Disability Insurance division. "Disability insurance is an important element of an individual's long-term financial security. People insure their homes, cars and valued belongings, yet neglect their most important asset: their income."

From October 23 - 27, 2009, Harris Interactive asked more than 2,100 consumers about their perceived likelihood of potential situations happening, the emotional impact of those potential situations and types of insurance they have purchased or currently own. The situations included a house fire destroying all personal belongings, having credit card information stolen and false charges made to the account, having one's car destroyed in an accident, having a vacation cancelled due to bad weather and becoming disabled and unable to work for a living.

In terms of emotional impact, becoming disabled and unable to work ranked only below one's home burning down and destroying all of their belongings (78 and 85 percent respectively). Ironically, only 10 percent of Americans said they have insured their income, compared to 73 percent who have insured their homes or rental property. An additional 88 percent say they have auto insurance, despite the fact that less than 50 percent consider having their car destroyed in an accident as 'devastating.'

"Many people believe that disability won't happen to them, or believe that employer- or government-sponsored disability plans will cover their needs," continued Frankl. "But 3 in 10 of today's 20-year-olds will become disabled before reaching age 67(1), and people need to ask themselves whether they are equipped to handle the emotional and financial consequences of that disability."

SOURCE Northwestern Mutual