4 Reasons You Don't Have Disability Insurance (And Why You Should Reconsider)

According to an annual survey by LIMRA, an association of financial services and insurance companies, 45% of families say they would face financial hardship within six months if a primary wage earner couldn't earn an income due to a disability. Yet only 14% of Americans say they have disability insurance, down from 31% in 2012.

Published 31 January, 2022

Why the disconnect? The reasons are far and wide:

I'm young. I'm healthy. I'm not engaged in high-risk activities. It's too expensive. The government will bail me out.

But the reality is, no matter your age, gender, or hobbies, a disability can happen. And if it does, it's important to be prepared.

Below are four common reasons people fail to buy disability insurance, and why these excuses are misguided.

Reason 1: You suffer from "it won't happen to me" syndrome.

We like to think of ourselves as rational decision-makers who actively plan for the worst. We install home security systems, keep a spare tire in our cars, and pack a rain coat when the skies turn grey.

But despite these precautions, most of us expect things to turn out great.

This phenomenon—the belief that the future will be better than the past or present—is called optimism bias. And according to neuroscience and social science, most people have this tendency.

We overestimate the probability of good things happening to us and underestimate the likelihood of undesirable experiences.

Take marriage for instance. According to experts, your chance of getting a divorce is about 39%. But ask any newlywed the likelihood of their marriage ending in a divorce, and they'll say zero.

It's the same with disabilities. Most don't believe one could ever happen to them. But the reality is, it can. And it does.

In fact, the Social Security Administration estimates that 1 in 4 of today's 20-year-olds will suffer a disability before they retire.

Do you want to bet against those odds?

Reason 2: You think disability insurance is too expensive.

People tend to wildly overestimate the cost of disability insurance. And the truth is, it can be expensive.

But when you purchase your coverage through the Appraisal Institute Insurance Trust, you'll benefit from the group purchasing power of thousands of real estate appraisers across the country.

This means our rates may be more attractive than you think. What's more, the AI Insurance Trust offers a 20% premium discount on disability insurance for new insureds for the first two years!*

Why? Because we believe whole-heartedly in the importance of this coverage, and want it to be accessible to as many people as possible.

Reason 3: You don't understand what a disability is.

What do you think of when you hear the word disability?

A debilitating car accident? A paralyzing fall?

Many falsely believe injuries are the most common cause of a disability. But in reality, 90% of disabilities are due to illnesses, not accidents.

The most common reasons for short-term disability claims are:

  1. Pregnancies (25%)
  2. Musculoskeletal disorders affecting the back and spine, knees, hips, shoulders, and other parts of the body (20%)
  3. Digestive disorders, such as hernias and gastritis (7.8%)
  4. Mental health issues including depression and anxiety (7.7%)
  5. Injuries such as fractures, sprains, and strains of muscles and ligaments (7.5%)

And the most common reasons for long-term disability claims are:

  1. Musculoskeletal disorders (29%)
  2. Cancer (15%)
  3. Pregnancy (9.4%)
  4. Mental health issues including depression and anxiety (9.1%)
  5. Injuries such as fractures, sprains, and strains of muscles and ligaments (9%)

Reason 4: You believe workers' compensation or Social Security will pay the bills.

Between workers' compensation and Social Security benefits, you may think you're safe from the financial burden of a disability.

But workers' compensation only covers injuries or illnesses that happen at your job. And according to a claims review study conducted by the Council for Disability Awareness, only 5% of disabilities occur in the workplace.

If you think Social Security benefits will cover the 95% of disabilities that occur outside of the workplace, you'd be wrong.

About 64% of applications for Social Security disability benefits are initially denied, and the average monthly payment for current beneficiaries, $1,259, is barely above the poverty line.

Next Steps

Have the facts above caused you to reconsider your need for disability insurance?

If so, take a closer look at the disability insurance available to you through the AI Insurance Trust. Visit us online to learn more.**

And if you're still not convinced or have questions, call an insurance representative at 800.222.9958. They're very knowledgeable and are happy to help!

*Premium discounts are based on favorable plan performance and are not guaranteed.

**Including features, costs, eligibility, renewability, limitations, and exclusions.

Underwritten by New York Life Insurance Company, 51 Madison Avenue, New York, NY 10010, on policy form GMR.