Disability Facts and Statistics

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Richard Reich

In my 25+ years as an independent life and disability insurance broker, I have personally assisted thousands of clients with their life and disability insurance needs.

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According to a recent study, most people estimate they have only a 16% chance of becoming disabled during their working years¹ – in spite of the following startling facts²:

• If you’re under age 35, chances are one in three that you will be disabled for at least six months during the course of your career.
• Men have a 43% chance of becoming seriously disabled during their working years.
• Women have a 54% chance.
• At age 42, it is four times more likely that you will become seriously disabled than that you will die during your working years.

• Three in 10 workers entering the work force today will become disabled before retiring.
  – Social Security Administration, Fact Sheet January 31, 2007

• An illness or accident will keep 1 in 5 workers out of work for at least a year before the age of 65.
  – Life and Health Insurance Foundation for Education, November 2005

• One in 7 workers can expect to be disabled for five years or more before retirement.
  – “Commissioners Disability Table, 1998,” Health Insurance Association of America, the New York Times, February 2000

• 71% of American employees live from paycheck to paycheck.
  – American Payroll Association, “Getting Paid in America” Survey, 2008

• Disability causes nearly 50% of all mortgage foreclosures, 2% are caused by death.
  – Health Affairs, the Policy Journal of the Health Sphere, 2 February 2005

• Close to 90% of disabling accidents and illnesses are not work related.
  – National Safety Council, Injury Facts 2008 Ed.

• Less than half – 39% – of the 2.1 million workers who applied for SSDI benefits in 2005 were approved.
  – Social Security Administration, Office of Disability and Income Security Program

• Over 51 million Americans are classified as disabled, representing 18 percent of the population.
  – U.S. Census Bureau, Public Information Office, November 2008

• In the U.S., a disabling injury occurs every 1 second, a fatal injury occurs every 4 minutes.
  National Safety Council, Injury Facts 2008 Ed

• Unexpected illnesses and injuries cause 350,000 personal bankruptcies each year.
  – “Illness and Injury as Contributors to Bankruptcy,” Health Affairs, February 2, 2005

• In the last 10 minutes, 498 Americans became disabled.
  – National Safety Council, Injury Facts 2008 Ed

• The average long-term disability absence lasts 2.5 years.
  – Commissioner’s Individual Disability Table A

• 70% of the private sector workforce has no long-term disability insurance.
  – Social Security Administration, Fact Sheet January 31, 2007

• According to the Federal Reserve, 44% of U.S. families spend more than they earn.
  – Federal Reserve Board, Survey of Consumer Finances 2004

• Over 50% of the workforce has no private pension coverage and a third have no retirement savings.
  – Social Security Administration, Fact Sheet 2007

Sources:

1. Gallup survey, conducted for UNUM Corporation (508 respondents, aged 30 to 65), reported by Best’s Review.}
2. “Why Disability” booklet, published by National Underwrite.

Probability of Disability versus Death

A disability’s financial implications can be even more disastrous than that of a premature death. Death is certain to occur at some point, while disability may never occur. However, for most people death occurs after the income earning years. During one’s income earning years, when the financial impact is more strongly felt, disability is a greater threat and more likely to occur. 

Source: 1985 Commissioners’ Disability Individual Table A and 1980 CSO Mortality Table

Likelihood of Disability Before Age 65 at Different Ages

One of the biggest myths about disability is that it doesn’t happen to younger people. The chart below shows the odds of having a long term disability (one lasting more than 90 days before age 65) along with average duration of disability.

Source: 1985 Commissioners’ Disability Individual Table A

Average Duration of Disability

Why should you consider long term disability insurance? Ninety days is a long way to go without income. That would most likely put a serious drain on savings. One’s credit might suffer.

Chances are that a disability that lasts at least 90 days will extend much longer. Here are some statistics:

Average Duration of a Long Term Disability at Various Ages
(Disabilities lasting 90 days or more)

Source: 1985 Commissioners’ Disability Individual Table A