Disability Insurance: Let’s Keep It in Our Front View; Not the Rearview Mirror

May is known in the employee benefits world as ‘Disability Insurance Awareness Month’ (‘DIAM’). Each May, The Council for Disability Awareness and several insurers join forces to raise awareness of disability and the importance of income protection. Despite these efforts, however, it’s easy for employers and the average person to overlook.

With a growing economy, low unemployment the value of what for many Americans is their single biggest asset, their home, on the rise, the industry warning are easy to ignore. But if the economy’s current numbers are compelling, there’s another set of numbers which should be of equal interest and worthy of an ongoing dialogue

According to the Social Security Administration, 25% of U.S. workers aged 20-50 will become disabled before the age of 67. Now, when most people think of disability, they envision something catastrophic and permanent in nature. The reality is rather different. A 2016 study by the Integrated Benefits Institute indicates most disabilities (three quarters, in fact) last less than three months, with a majority of the balance resolving to the point than an employee can return to work within six to twelve months, that same study indicates about 6% of workers will sustain a Short Term Disability in a given year. But short term can mean big impact.

In a majority of instances, disability is an acute, short-duration event with potentially catastrophic financial implications. Looking at the saving and spending habits of a majority of American workers, the ability to bring home a paycheck is vital for not simply maintaining a standard of living, but simply meeting everyday expenses. Consider some recent statistics culled from recent studies looking at American worker’s financial health:

• 55% of Americans say they break even or spend more than they make each month
• 57% of Americans say they have less than $1,000 in savings
• 40% of American workers earning more than $100,000 per year admit living paycheck-to-paycheck

With the relatively high incidence of disability amongst the workforce without a much personal financial reserves, a relatively quick physical recovery from a disability that interrupts income can leave financial (and psychological) effects that are deep and long lasting.

There is a lifeline in this bleak picture however - disability Insurance. Whether provided by or made available through an employer, or even purchased privately, insuring a regular income stream can safeguard a majority of American worker’s financial health and thereby allow them to focus on their physical and mental health.

The statistics and topic discussed here are most-likely not breaking news – the overall trend and underlying issues have been present for decades – but that doesn’t make them any less important to your workforce. Maintaining a consistent, regular dialogue about the issues surrounding income protection, trends in the marketplace and strategies that you may not be aware of that can solve unique issues that your organization is facing is an important part of ensuring your overall benefits plan is working for your employees.