For many families, a breadwinner becoming disabled is among the most devastating financial hits that can befall them. In some cases, the purely financial consequences of a severe mid-career disability can be more significant than the death of a breadwinner. 

This is because life insurance policies don’t pay out in the event of a disability not likely to result in death, and also because a disabled person still requires food, clothing, shelter and care, including medical care.

Disability insurance is designed to replace the essential income an individual earned prior to becoming disabled. A typical disability policy may replace between 50% and 65% of pre-disability earnings – tax free if the individual also paid the premiums for his or her policy. That’s not enough for everything, but it’s normally enough to provide for the essentials.

Disability insurance premiums can be significant – often between 2% and 4% of income and sometimes more than that, depending on age, medical history, amount of coverage and the details of the policy. 

But is it worth it? Consider these facts, compiled by the Council for Disability Awareness:

• Any given 20-year-old has a 1 in 4 chance of becoming disabled prior to reaching retirement.
• About 12% of the population is classified as disabled.
• 5% of the workforce receives Social Security disability benefits and half of the recipientes were in their 40s or younger.
• 62% of all personal bankruptcies list medical debt or medical problems as a contributing factor.

Think your employer’s workers’ compensation insurance is likely to cover your disability? Think again. Workers’ compensation only covers injuries arising directly from work-related causes and incidents.

Not all disabilities are total and permanent. But they can still hurt your ability to earn a living, as well as dent your family’s savings. The average individual disability claim lasts for 31.6 months

Top Causes of Disability 

Musculoskeletal system and connective tissue disorders account for about 29% of new disability claims each year.

Cancer is the second leading cause of new disability claims (15.1% ) and the fourth leading cause of ongoing claims, according to the Council for Disability Awareness CDA Long Term Disability Report.

Other top causes of new claims include:

• Injuries and poisoning (10.3% )
• Mental illness/disorders (8.3% )
• Cardiovascular and circulatory problems (8.7% )

Nervous system related disorders account for 7.7% of new cases, but 15.2% of existing/ongoing claims, making them the second-leading cause of ongoing disability.

Calculate your chances of becoming disabled 

The Council for Disability Insurance has created an online tool to help you assess the statistical probability that you will eventually become injured or sick and unable to work, based on your age, weight, profession, sex, and a few other factors. To use this tool, the Personal Disability Quotient Calculator, click here.

In most cases, it’s clear that a relatively small disability insurance premium looks affordable, compared to the devastating potential consequences of becoming disabled and unable to work.