At some point during their working lives, more than a quarter of today’s 20-year-olds will experience a disability that interrupts their ability to earn an income.1 However, far too many Americans believe they are not at risk of a disabling illness or injury, as two-thirds do not have private long-term disability insurance.1
You can help your employees protect their finances by educating them about the reality of disability and by offering resources to make the right decision. Here are my recommendations:
Help employees face the facts
The following are just a few statistics for employees to prove disability insurance is an important consideration:
- Savings won’t cut it. Saving 5 percent of your income for 20 years would only pay for about a year’s worth of bills2 — and the average long-term disability claim lasts 30.6 months.3
- Don’t put off buying disability insurance. If you buy it as soon as you start working, the cost of insurance will be low and it’ll be the easiest time to qualify.
- Office workers are not immune to disabilities. A disability can be caused by a wide variety of factors not related to physical labor, such as pregnancy complications, accidental injuries and mental disorders. In fact, back pain causes more than 1 in 4 income-disrupting disabilities, and cancer is behind more than 70,000 diagnoses for 20- and 30-year-olds each year.4
Offer resources (and games!) to learn more
The Council for Disability Awareness recently created the Defend Your Income movement, an educational program that unites consumers, advisers, employers and insurers in the fight to protect the incomes of working Americans from the financial risks of serious illness or injury.
The Defend Your Income website is a resource where you and your employees can test your disability IQ and ensure you have an income protection plan through the use of interactive games, quizzes and calculators.
For example, on this site you can calculate your Earnable Income Quotient, which is a measure of your earning potential from now until you retire. For a young person in his or her 20s, that can easily be $2 million or more* — not a small chunk of change! They’ll want to protect that income.
Help your employees learn what’s at stake if they forgo disability insurance; it could have a substantial impact on their future financial well-being. Plus, providing these types of resources will encourage enrollment and participation, which can help protect your employees if they ever have a disabling illness or injury.
*Figure based off of a 29-year-old who currently makes $35,000 per year, that receives a the same level raise each year (3 percent) and wants to retire at 65.
1Social Security Administration. Fact Sheet. March 18, 2011.
2Defend Your Income website. Fast Facts About Disability. Available at: http://defendyourincome.org/pdf/fastfact.pdf. Accessed December 6, 2012.
3Gen Re 2010 U.S. Individual DI Risk Management Survey
4Defend Your Income member website. Program Overview: Join the Defend Your Income Movement. Available at: http://www.defendyourincome.org/advisors/index.php. Accessed December 6, 2012.