Most Americans are not prepared to deal with the possibility of becoming disabled and, in turn, unable to work, according to new research by the National Association of Insurance Commissioners (NAIC).
More than half (56 percent) of U.S. adults say they would be unable to pay their bills or meet expenses if they became disabled and could not work for a year or longer.
The survey, fielded by International Communications Research, showed consumers have an optimistic picture of their future, with only 13 percent saying it was somewhat or very likely they would become disabled and unable to work. However, data from the Social Security Administration (SSA) indicates that a substantial portion of the nation’s population — 20 percent — will actually become disabled for a year or more before reaching age 65.
The NAIC says the findings highlight the need for long-term disability insurance, designed to protect people financially by replacing some of their lost income. In the NAIC survey, only 44 percent of respondents indicated they had long-term disability coverage. Of these individuals, 71 percent said their long-term disability insurance was employer provided rather than individually purchased. This suggests a significant number of people could lose their coverage in the event of a change in employment status.
“Many people don’t think about the impact becoming disabled can have on their ability to earn a living and remain financially independent,” said Walter Bell, NAIC president and Alabama insurance commissioner. “Understanding the role of disability insurance at each life stage is critically important to one’s total financial security.”
The NAIC provides information on disability insurance for consumers in all life stages on its consumer education Web site, Insure U (www.InsureUonline.org).