Written by: Corey Janoff
Happy May, everyone! For those of you who don’t know, May is disability insurance awareness month. Not just this year, but every year. May is also Asian Pacific Heritage Month, Jewish American Heritage Month, National Physical Fitness and Sports Month, Skin Cancer Awareness Month, National Bike Month, among others. Don’t forget Mother’s Day.
Since this is a personal finance blog, we are going to focus on disability insurance awareness today. I could argue disability insurance is one of the most important insurances you can ever own, because it protects your most valuable asset. For our physician clients, specialty specific physician disability insurance is imperative (also known as own-occupation disability insurance). Your most valuable asset isn’t your house or your car. Your most valuable asset is your income and your ability to work and earn an income. For many readers of this blog, your career earnings will approach or even exceed $10,000,000, which is about one fifth of the residual earnings Jerry Seinfeld receives each year from his iconic show, Seinfeld.
For regular readers of this blog, you have heard me bring up the importance of disability insurance before. You can read some of those blog posts here, here, here, here, and here. Today we won’t go into why you need disability insurance. If you don’t have it, get it. Avoid these mistakes when getting disability insurance. If you rely on your income and your income goes away, then you’re in big trouble. If you need more convincing than that, read those posts I just linked to.
Today, to celebrate disability insurance awareness month, we compiled a list of 14 facts about disabilities. Why 14? Because I didn’t have the desire to find a 15th and at 1300 words, I figured this post was long enough. I hope you find it valuable and insightful. There are some eye-openers, for sure. See below.
14 Facts about Disabilities
1. Over 1 in 4 of today’s 20-year-olds will become disabled before they retire. People underestimate the risk of most things in life. The it’s-not-going-to-happen-to-me syndrome. You’re probably reading this thinking it won’t happen to you. It probably won’t. 3 out of 4 of you won’t get disabled. But 1 out of 4 of you will incur an injury or illness that keeps you out of full-time work for at least a year. 1 in 20 people incur a short-term disability (lasting less than six months) every single year.
2. The average long-term disability claim lasts 34.6 months. Could you survive for 3 years without income? About half of Americans can’t afford to pay for a $400 unexpected expense without borrowing money or selling something. Maybe you have wealthy parents who would be willing to support you. But do you really want them to drain their hard-earned assets to care for you?
3. Only about 9 percent of disabilities are caused by accidents. Most people think the only way they will be unable to work is if they get in a bad car accident and break their back. Or break their spine skiing. Or get hit by lightning, or half-eaten by a shark. Even though accidents make news headlines, the reality is, bad accidents don’t happen as often as you might think.
4. About 91 percent of disabilities are caused by illnesses. How boring is that? You won’t have a cool story to tell about how you got disabled. It will be lame story and slow to progress and sad and depressing. Sports talk show host Dan Patrick previously revealed on his show his seven-year ongoing battle with polymyalgia rheumatica, an auto-immune disorder that causes intense joint pain. He needed to take Vicodin to play a round of golf. The treatment he went through has side effects of headaches, memory loss, and brain fog. It's tough to be a radio show host when your brain isn't operating at full speed. It’s been a challenge for him to sit in a chair and talk every day. If you do anything more than sitting and talking for a living, this disease could prevent you from doing your job successfully.
5. Musculoskeletal and connective tissue disorders and diseases are the number one cause of disability. Diseases of the nervous system and sensory organs are the number two cause. That means muscle, back, and joint pain. Arthritis, herniated discs, back/spine/joint pain, tendonitis, osteoporosis, rheumatism, scoliosis, sciatica. MS, ALS, Parkinson's, epilepsy, Alzheimer's, eyesight and hearing disorders, among others. Click this link for a chart listing the most common causes of disabilities.
60,000 Americans per year are diagnosed with Parkinson's
6. Most disabilities are not work related. That worker’s comp insurance you may have probably isn’t going to be of any value. In 2016, only one percent of workers missed work because of a job-related injury or illness.
7. Only 31% of the workforce is covered by employer provided disability insurance. Most of you don’t have disability insurance through work. If you do, it is probably crummy and doesn’t cover all of your income. Work plans don’t go with you if you change jobs. The employer and insurance company can change the policy at any time. Assuming you are somewhat healthy, it behooves you to purchase an individual policy outside of work.
8. You are more likely to incur a disability than you are to die prematurely. It is commonplace for people to purchase life insurance when they start having children. It’s just what you do. However, a disability is more probable and potentially more financially catastrophic for your family than a premature death would be. If you are alive but disabled, no offense, but you are a drain on your family and possibly society. You still need to be housed, fed, and cared for. That costs money. Being alive costs money. Living is expensive. If you are dead, you don’t cost anything.
9. 65 percent of individuals living in poverty for at least three years had a disability. The odds of living in poverty are significantly greater if you are disabled. You are about 2.5 times more likely to declare bankruptcy and live in poverty if you have a disability.
10. The average Social Security Disability Insurance (SSDI) benefit is approximately $1,200/month. Good luck surviving on that. That explains fact number nine. It also takes about two years to get approved for a claim on SSDI.
11. Only 34% of Social Security Disability Insurance (SSDI) claimants are actually approved to receive benefits. It is highly unlikely you will receive benefits from Social Security if you are disabled. To qualify for SSDI, your disability has to prevent you from working any job and be expected to last at least one year or result in death.
12. About 13% of Americans currently have a disability. A person is considered to have a disability if, due to a physical, mental, or emotional condition, they have difficulty with at least one of the following six things: hearing, seeing, cognitive impairment, walking/climbing stairs (if over age 5), basic self-care (5+ years old), or living independently (15+ years old).
13. Only 37% of working-age adults with disabilities are employed. 24% are employed full-time. Some people I talk to think that they would still be able to work even if they had a disability (*cough* radiologists *cough*). Some people can work despite having a disability. It all depends on the nature of your job and the nature of your disability. But nobody is completely immune. Even the radiologists will have trouble working if they have an ocular or brain disorder.
14. The median household income for a household with a working-age adult who has a disability was $45,500 in 2017. That is about 25% less than the median household income for all households in the America ($59,039 according to 2016 US Census). If you are disabled, your spouse will have to pick up the slack (or vice versa). Even if you are capable of working full-time with a disability, your employment opportunities and growth potential may be limited.
Can You Still Work with a Disability?
Depending on your occupation, you may be able to continue working with a disability. Comedian Josh Blue seems to be doing alright for himself despite having cerebral palsy.
Not all of you will be able to have a successful second career as a stand-up comedian if you incur an injury or illness. Get yourself a disability insurance policy to protect your income and keep your family finances stable if the unfortunate happens to you. For help finding the right disability company and policy for your circumstances, please reach out to us.