Just over six in ten Americans say that protecting their income in the event of a disability is a top financial goal, but only 8% have a disability income insurance policy, according to a new study.
The Northwestern Mutual Life Insurance Company, Milwaukee, published this finding in a summary of results from a study, “The State of Planning in America.” The study’s release in May coincides with Disability Awareness Month.
Among other top financial goals identified in the study are "having a good standard of living in retirement" (77%) and "not falling below [one’s] current standard of living" (76%).
"From the moment you start working until the day you retire, your ability to earn an income is your most important financial asset," says Sandy Botcher, Northwestern Mutual Vice President-Disability Income Insurance, in a prepared statement. "Consider this: a $60,000 a year salary results in $2.4 million over a 40-year career—and that doesn't take into account inflation, raises, or the long-term growth potential of money invested in retirement saving vehicles along the way. “What happens if a disability prevents you from earning this income?"
Individual disability insurance pays a monthly benefit in the event of a disability, helping replace lost income, meet ongoing financial obligations, and even maintain financial goals. Unlike workplace disability insurance, individual disability insurance belongs to the individual and is portable from one job to the next.
"We're seeing that Americans recognize this risk, but are taking an 'it won't happen to me' approach," says Botcher. "According to data from the Society of Actuaries, people in their working years are much more likely to be disabled for 90 days than they are to die prematurely.”