While you're healthy now, you might not always be. Are you prepared to support you or your family financially if you were out of work for weeks or even months? With May marking Disability Insurance Awareness Month, consider the risk of life-changing accidents and the consequences if you are caught without a safety net.
The nonprofit Life Happens created DIAM to highlight that disability can happen to anyone, making the need for income protection that much greater if they are out of work for a long stint.
With the chance of disability high, assess your need for disability insurance for your small business to cover unexpected costs that may arise as a result of a major accident or negative health situation.
Here are five facts that illustrate the importance of DIAM:
1. There is an Awareness Gap Surrounding Income Protection
According to the Council for Disability Awareness, consumers ranked health and income at the top of the list of what is most important to them. However, the study revealed a huge gap in believing health and income were their top priority and actually taking action to prove this.
Although 67 percent of respondents said they viewed income as important, only 28 percent said income was the greatest priority to protect. The survey revealed less than half (43 percent) of working consumers had income protection - 24 percent fewer respondents compared to those who said income was the most crucial to them.
2. Majority of Consumers Unable to Pay Bills Without Income
More than 3 in 4 respondents said they would not be able to pay their bills for more than a year without an income, a 2014 CDA survey stated. Respondents said they may have to resort to using their savings or investments or charge expenses to their credit card, which may not be sustainable for the long term.
"You have a 25 percent chance of becoming disabled during your working career."
3. Chance of Becoming Disabled Much Higher Than Winning the Lottery
There is also a mismatch between how people perceive the probability of something happening and the percentage of this event actually occurring.
The CDA study showed 15 percent said they had a chance at winning the lottery. However, the reality of this happening was is only a fraction of a percent (.00004 percent). There is a much higher likelihood of a significant injury or illness as you have a 25 percent chance of becoming disabled during your working career, according to the CDA.
4. Injury/Illness Incidence Rates Rising
Not only do respondents have a misconception about the chance of a mishap occurring, but occupational injury and illness rates are also on an upward trend. A survey by Unum Group revealed incidence rates for joint disorders and musculoskeletal conditions - the leading causes of disabilities - surged over the last five years. Long-term and short term incidences of joint disorders soared 15 percent and 13 percent respectively. Meanwhile incidents of musculoskeletal conditions increased even higher - a 24 percent rise for long term incidences and 11 percent for short term within the past five years.
5. Average Time Off Work Due to Disability is 2.6 Years
While you might think that you will likely recover quickly from a sore back or broken leg, the opposite is probably true. The Gen Re, U.S. Group Disability Rate & Risk Management Survey found the average long-term disability claim stretches for 2.6 years.
In the face of long-term disability, consumers need to have a backup plan, such as disability insurance, in case they are unable to recover fully from an injury or mishap.