May is Disability Insurance Awareness Month, a good time to shine the spotlight on the state of DI insurance in America. According to Northwestern Mutual’s 2016 Planning & Progress Study, half of Americans rely on their job income to meet their financial obligations; yet more than two thirds (69%) do not own DI insurance to protect this integral asset in case an illness or injury interferes with their ability to work.
This is concerning considering that there are one in four odds of becoming disabled for three months or more during one’s working career and, per Life Happens research, nearly half of Americans would find themselves in financial trouble in a month or less after incurring a disability.
“The risk of experiencing a serious illness or injury is more common than we’d like to believe, and the impact extends way beyond the physical,” said Steve Stribling, Northwestern Mutual vice president – disability income. “Our research shows that the majority of Americans (58%) view financial security as a key aspect of the American Dream. Unfortunately, a disability without income protection can quickly turn that dream into a nightmare by creating financial disruption that may take years to repair.”
Disability income insurance is specifically designed to replace a significant portion of income and help with expenses and lifestyle needs if sickness or injury prevents a person from earning a living. This can help preserve an existing nest egg, provide flexibility to keep contributing to retirement savings and enable an individual to focus on their health without added financial stress.
However, despite these benefits, Northwestern Mutual research indicates that the majority of Americans (69%) do not own disability insurance and are most likely to manage the financial implications of income interruption by reducing expenses (51%) or taking money from their personal savings (35%), which can have a long-term detrimental impact.
“As life expectancies and costs increase, people are already tightening budgets and stretching savings to prepare for the possibility of an extended retirement,” continued Stribling. “Disability income insurance is an easy, affordable way to relieve some of the pressure of the unexpected and keep retirement planning and other financial goals on track. Protecting the one asset that protects all other assets should be at the core of any financial plan.”
Ayo Mseka
Editor-in-Chief