Taking a risk, most employees lack long-term disability insurance

Following up on our discussion of stroke, we came across the startling results of a recent survey. The researchers found that more than two-thirds of all workers in full-time jobs lack long-term disability insurance. One-third of all such employees simply don’t have it available to them, while 38 percent have the option of employer-sponsored coverage but choose not to enroll. The lack of coverage poses an enormous risk, because medical problems, some of which involve disability and inability to work, are factors in approximately 50 percent of all home foreclosures and personal bankruptcies in the U.S.

So many workers are without coverage because of the growing number of employers who have made various benefit programs options for employees to select from rather than something given to all. About 30 percent of all married couples, however, have one spouse who is disabled for a year or longer during their working lifetimes.

More than one-third of employees that have the option to buy long-term disability insurance decline, gambling that they will be among those who don’t need the coverage, or believe that the expense of paying for it outweighs the risk. Another 38 percent of those declining to pay for long-term disability coverage simply haven’t thought about the issue, while the remaining 19 percent think that the subject of disability is distasteful, so they’d rather not think about it.

Male employees, technical workers, minorities, and workers younger than age 50 are more likely to purchase long-term disability coverage than other employees. While a full 53 percent of all those surveyed express the understanding that Social Security benefits could cover their living costs if they become disabled, about 65 percent of all claims for Social Security disability are denied, and the filing and processing typically takes months.

Social Security disability benefits may not be the best Plan B. Employees need to understand the risks a disability poses to home and family, and if this survey is accurate, employee advocates and financial planners have their work cut out for them.

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Alan Olson practices employment law throughout the United States from his offices in New Berlin, Wisconsin. Attorney Olson may be contacted at [email protected] with questions about the information posted here or for advice on long-term disability benefits claims.

Source: Insurance Networking News, “The Dearth of Disability Insurance,” Justin Stephani, May 14, 2012

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