We insure our cars, homes, electronic devices, and even pets, but few people protect their income through disability insurance. According to the 2023 Insurance Barometer Study, a joint study from LIMRA and Life Happens, a majority of consumers (54%) are concerned about supporting themselves if they can no longer work due to sickness or injury. This concern is more pronounced with younger generations, more than 6 in 10 Gen Z and Millennials say they are worried about the financial impact of becoming disabled.
The consequences are significant. Six in 10 consumers (61%) say they would face financial hardship within one year if the primary wage earner becomes disabled, and 49% said they would face financial hardship within six months if they were sick or unable to work. Without proper insurance, consumers would have no choice but to get the money elsewhere:
- 51% of consumers would pull from their personal savings;
- 32% would look to family; and
- 26% would withdraw from their retirement accounts incurring penalties.
More concerning, many consumers are unsure how they would fare financially in the event of a disability. Sixteen percent of consumers say they don’t know what source of financial help they would turn to, and 17% say they are unsure of how much time could pass before feeling financial hardship.
Clearly, the industry has an opportunity to engage more consumers in conversations about protecting their income. One way is to emphasize why current owners purchased disability coverage. The top three reasons consumers purchased DI are retirement planning (31%), entering the workforce (28%), and close familiarity with a lack of disability coverage (27%).
Illustrating how some consumers use disability insurance to protect their retirement goals while showing how people without coverage experienced financial strain can spur consumers to take action toward safeguarding their income.
The Social Security Administration reports that 1 in 4 adults will become disabled before reaching age 67. To many that may seem unlikely, however, it’s better to protect your income now than risk a financially insecure future.
Each May, LIMRA supports Disability Insurance Awareness Month, an annual campaign created and sponsored by Life Happens, to bring awareness about the importance of disability insurance to protect one’s income. To learn more about consumers’ perceptions of disability insurance, check out the Disability Insurance Awareness Month Infographic.