Reasons Why People Don't Insure Their Income Against Disability

Ian C. Langtree - Writer/Editor for Disabled World (DW)
Published: 2014/12/10 - Updated: 2025/05/24
Publication Type: Informative
Category Topic: Disability Insurance - Academic Publications

Page Content: Synopsis - Introduction - Main - Insights, Updates

Synopsis: This report, produced by the Council for Disability Awareness and based on a survey of 1,000 full-time U.S. workers, examines why a majority of Americans do not have disability insurance despite recognizing the importance of protecting their income. The findings reveal that 57% of working adults lack this coverage, with the top reasons being perceived unaffordability (33%), never having considered it (30%), and lack of knowledge (24%). The report highlights that most people underestimate their risk of disability - such as back pain, depression, or cancer treatments - believing catastrophic accidents are the main cause, when in fact, everyday health issues are more common. It also points out that most Americans have less than six months of savings, while the average long-term disability lasts about 24.5 months, leaving many financially vulnerable. The information is authoritative and useful for people with disabilities, seniors, and anyone reliant on their income, as it provides clear examples of inadequate alternative strategies, such as relying on savings, loans from family, or government programs, which often fall short during prolonged recovery periods. The report encourages consulting trusted advisers and exploring disability insurance or related policies as practical solutions to safeguard financial stability - Disabled World (DW).

Introduction

Twenty-seven percent of working adults think they have a greater chance of being audited by the IRS than experiencing an illness or injury that prevents them from working for a period of time.

Main Content

The Council for Disability Awareness' new report, "America's Income Protection Picture," identifies several factors preventing many full-time working adults from insuring their income. And the majority of consumers believe their income is one of the "most important things in life."

Whether a millennial at the start or height of her earning years, or a baby boomer saving for retirement, a consumer's ability to work and earn an income is probably his or her most valuable financial resource. Yet 57 percent of working adults surveyed said they lack disability insurance, which is one of the best ways for a consumer to replace a portion of his income if he or she can't work for several months - or even several years - due to an illness or injury.

Why working adults said they don't have coverage:

• I can't afford it - (33%)
• I've never thought about it - (30%)
• I don't know enough about it - (24%)

Employees, freelancers and entrepreneurs should consider the following:

Most people can't afford not to have disability insurance:

Forty-one percent of respondents said they would consider buying disability insurance if it was less expensive. But 60 percent said they have less than six months of savings. The average long-term disability lasts 24.5 months, leaving most uninsured workers strapped for cash while they're recovering from a surgery, illness or injury.

1 in 4 of today's 20-year-olds will experience a disability before retirement:

Working adults dramatically underestimate their risk of being out of work for a while - one reason they may not think about getting coverage. The leading causes of long-term disability are not catastrophic accidents, as many think, but include back pain, depression and time off needed during cancer treatments.

Other income-replacement solutions are usually inadequate:

Half of working adults said they would tap savings and investments if their income stopped due to a temporary disability. Millennials in particular said they would look to friends and family for help or a loan, while those over age 50 said they would access government programs or retirement savings. But these short-term solutions are unlikely to help during recovery from an illness that could last two years or longer.

Consumers should ask themselves:

• How would I pay my bills if I got sick or injured and couldn't work for three months or more?
• What if my partner or spouse became too sick or injured to work: Could we survive on one paycheck?
• How long could I meet all of my financial obligations (e.g., bills, student loans, rent) with the money I have in savings and other sources?

One-third of working adults, and 40 percent of Millennials, would consider buying disability insurance if they knew more about it. Consumers who hesitate to answer any of the above questions might want to consult a trusted adviser for help or advice.

"Employees can get help in understanding their employee benefit options from their company's human resources department, or they can access an insurance agent or a financial adviser to develop an overall financial plan that includes taking steps to protect their income," said Carol Harnett, CDA president.

"There are several ways to make sure you have an income stream while you're out of work. A short or long-term disability insurance policy is usually seen as the best way to cover a portion of your income while you're out of work, but other policies such as critical illness and accident insurance may help as well."

The Research

Wakefield Research conducted the survey using an email invitation and online survey between May 28, 2014, and June 9, 2014.

The 1,000 participants met the following criteria: U.S. residents, employed full-time in the private sector, between the ages of 21 and 68, with a household income of $25,000 or more.

Insights, Analysis, and Developments

Author Credentials: Ian is the founder and Editor-in-Chief of Disabled World, a leading resource for news and information on disability issues. With a global perspective shaped by years of travel and lived experience, Ian is a committed proponent of the Social Model of Disability-a transformative framework developed by disabled activists in the 1970s that emphasizes dismantling societal barriers rather than focusing solely on individual impairments. His work reflects a deep commitment to disability rights, accessibility, and social inclusion. To learn more about Ian's background, expertise, and accomplishments, visit his full biography.