There is a wide gap between what consumers perceive about disability and income protection planning, and the actual facts regarding these topics. In January of 2011 the not-for-profit Council for Disability Awareness (CDA) released a consumer study entitled The Disability Divide.
The study revealed that 90% of respondents rated their ability to earn an income as the most valuable resource they possessed to achieve financial security. However, only 37% have taken steps to protect their income.
Reality vs. Perception
Consumers show a major disconnect between the reality and the perception of what causes disabilities. Seventy one percent of the study respondents believe that disabilities are most likely caused by serious accidents. However, the truth is that only about 9% of long-term disability claims are the result of accidents. Instead, the vast majority of long-term and even permanent disabilities are the result of more-common causes: chronic disease, back and joint pain, pregnancy, cancers, and depression.
Furthermore, the study shows that 83% of respondents feel that anyone could become disabled at any time. But when asked, most of these respondents don’t believe that they are personally at risk.
Financial Impact
Regarding the impact that disability can have on income, respondents had a firmer grasp on the facts. Fifty seven percent of those surveyed recognized the correlation between disability and the inability to earn money. Still, 65% felt they could cover their expenses for about a year if they did in fact become disabled. But research shows that 71% of Americans live from paycheck to paycheck, and do not have nearly enough funds set aside for emergencies.
Education is Critical
It is clear that employees need more education regarding the likelihood of illness or injury, as well as some pointers on how they can protect themselves and their incomes from risk. Employees need to talk with their employers about what their benefits would cover in the event of accident or illness. Moreover, understanding the situation is only half the battle. Once an employee gains an understanding of the issues at hand, they must take positive action to preserve their income.
Resources
The CDA offers information and resources for consumers, financial advisors, and employers to educate themselves about the possibly devastating effects of disability. Visit www.disabilitycanhappen.org to access disability preparedness tools and resources.