4 myths about disability insurance

Are you underestimating your chances of experiencing an income-disrupting event?

Income is essential to a household's financial security. But, while we don’t think twice about buying insurance to protect our health, homes, and cars, we don’t tend to protect our incomes — through disability insurance — at the same rate. Read on to discover some common myths and misconceptions around disability insurance so you can better protect yourself and your family.

Myth 1: It won't happen to me

Many individuals underestimate their own chances of being out of work as the result of a serious injury or illness. The mindset that “it can’t happen to me” creates a false sense of security and lessens the perceived need for protection. Unfortunately, the chances of needing disability insurance are much greater than most people realize. In fact, Americans are five times more likely to become disabled than die in a given year, but they are more financially prepared for death than they are for a potential disability.¹

Another incorrect assumption: people tend to believe that serious injuries or illnesses are most common among people who are older, male, and work in hazardous professions like construction. The notion that disabilities are more likely to occur among certain groups of people who are “not like me” reinforces the myth.

The truth is that people of all ages, demographics, and professions have roughly the same potential to experience an income-disrupting injury or illness. At 23%, maternity leave is the most common reason for short-term disability claims.²

Myth 2: Disabilities happen at work

Many working adults believe that disabling accidents are generally job-related and, therefore, covered by workers’ compensation or Social Security Disability Insurance (SSDI). However, only 9% of all disabling accidents or illnesses occur at, or are related to, work — and therefore most disabilities are not covered by workers’ comp.⁴ In addition, the set of qualifications to be approved for SSDI are much higher than many people realize, and many disabilities that would be payable through the disability insurance you get through work would not be approved for SSDI.

Myth 3: Disabilities are catastrophic

What qualifies as a disability? More than you might think. Many people incorrectly believe the term applies only to catastrophic conditions like paralysis from a car accident or a debilitating stroke. Many do not realize that disabilities are typically the result of less severe injuries and more common conditions such as pregnancy, back pain, depression, and digestive disorders.

Myth 4: “Disability insurance” is for individuals with disabilities

The term "disability insurance" is confusing to many and, arguably, inaccurate. The name conjures up images of permanent, life-altering disabilities rather than less serious injuries and treatable illnesses. But disability insurance is really just another way of saying “income replacement,” and that’s exactly what it does: disability insurance provides income replacement for several months or years for a wide array of conditions and medical events. For example, 4 in 10 individuals do not associate taking maternity leave with disability insurance, even though it's the leading cause of short-term disability (STD) claims by a wide margin. Confusion caused by the name contributes to lower interest and ownership relative to other forms of insurance.

Hopefully, this information was useful to help you overcome some of the most common misunderstandings about disability insurance. Click here to read more.