Who Needs Disability Insurance, and Who Needs It the Most?

In this article we will be examining how often a person can become disabled, who could make use of a disability policy (personal or business) and who needs one the most.

Why Does Anyone Need Disability Insurance?

Firstly, why does anyone need a disability insurance policy? Working adults who rely on a paycheck need a disability insurance plan when an illness or injury persists over a period of time that cannot be financially covered by adequate employer coverage or personal savings. In times like these coverage that you can move around with wherever life takes you is highly recommended.

Personal Disability Insurance

Starting with personal disability insurance plans encompassing long-term disability (LTD) and Short-term disability (STD). Around 1 in 4 twenty-year-olds will experience a disabling illness or injury lasting 90 days or longer before they retire and 1 in 8 workers will be disabled for five years or more during their lifetime. 90% of all long-term disabilities are caused by medical illnesses (such as cancer, heart disease, or back disorders) rather than accidents. In any given year, roughly 5% of insured workers experience an incident resulting in a short-term disability. Roughly 12% to 25% of adults will face a long-term disability over the course of their career.

Why Women Often Need It More

When factoring in gender, women often need a personal disability insurance plan more than men because they have a statistically higher rate of filing disability claims and face a higher risk of becoming disabled during working years. Women are roughly 40% more likely to become disabled due to a long-term illness or injury than men. A significant percentage of short-term and long-term disability claims for women are related to pregnancy and childbirth complications (accounting for nearly 10% or more of claims filed). They also experience higher rates of specific disabling conditions, including autoimmune diseases, arthritis, anxiety, and depression. Data also shows that women tend to experience longer benefit durations and take longer to recover and return to work. When faced with a disability women are more likely to be financially impacted. Single women report more of an impact than married counterparts.

Business Disability Insurance

Moving on to business disability insurance plans which when paid out contribute to the day to day cost of running ones business while disabled. Historically, men have held a higher percentage of majority-owned small businesses and high-earning senior roles, though female business ownership and representation in high-risk/high-income fields (like medicine) are growing rapidly. These policies have a shorter benefit period (pay-out period), but boast a higher benefit limit (pay-out amount) than a personal disability to cover the higher costs associated with business costs.

The Bottom Line

In conclusion, while a disability policy is not needed by all working adults, those who are not already covered by an employer; and/or have a higher income they would like to insure; and/or business owners who need extra income to keep of with the cost of running their business should highly consider acquiring a personal or business disability policy. Women especially should consider their options for disability coverage since on average they need it more often than men (specifically personal coverage as opposed to business).