posted by Winthrop Cashdollar
on May 31, 2016
More than half of American workers indicate that they know very little or nothing at all about disability income insurance. And only about one in three Americans working in private industry has private disability income coverage. As Disability Insurance Awareness Month (DIAM) comes to a close, we spoke with Winthrop Cashdollar, AHIP’s Executive Director of Product Policy, about what working Americans don’t know – but should – about disability income insurance.
How likely is a disabling illness or injury that could prevent you from working?
Winthrop Cashdollar: Most working Americans greatly underestimate their risk of extended work disability. According to the Social Security Administration, just over one in four of today’s 20-year-olds will become disabled before they reach retirement age.
The Social Security Disability Insurance (SSDI) program and Workers’ Compensation programs lack adequate disability income protection for most working Americans. How does disability income insurance close the gaps in these programs?
Cashdollar: Americans also overvalue the generosity and availability of disability benefits from government programs. To start, nearly two-thirds of initial SSDI benefit applications are denied, and applicants who are eventually awarded benefits often have to wait a year or more before they receive their first SSDI check. But, that support may provide only meager income protection. The average Social Security benefit for a disabled worker is $1,166 a month (just under $14,000 a year) – far less than the federal poverty guideline for a two-person household.
Private disability income insurance benefits can provide crucial income protection when workers face a debilitating illness or injury.
In addition to replacing lost income, what value does DI insurance offer?
Cashdollar: A key feature of disability income coverage is the assistance that insurers can provide in helping a disabled employee get back on the job. Disability income insurers have unique expertise in working with disabled employees to facilitate return to work when that is feasible. A return to work leaves most employees much better off financially, medically, and emotionally than extended disability.
What should working Americans do to make sure that they are protected from the financial consequences of disability?
Cashdollar: Everyone should take the time to consider what would happen if they could not work for an extended time because of disability. Employees should make sure that they know whether they have disability income coverage through their employer and, if so, that they understand its key features. Workers who don’t have coverage can explore coverage options that are tailored to their individual needs by consulting a financial planner or an insurance agent who is familiar with the disability income policies available in their state. Look for an agent who has earned the insurance industry Disability Income Associate (DIA) designation, which demonstrates his or her disability income insurance expertise.
Winthrop Cashdollar is Executive Director of Product Policy at AHIP.