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THE DISABILITY DISCONNECT: WORKERS
ILL-PREPARED TO MANAGE DISRUPTION IN INCOME
UnumProvident research points to lack of knowledge about
financial risk
CHATTANOOGA, Tenn. (Sept. 12, 2006) – Millions of working U.S.
adults don’t consider their earning power to be their most valuable asset and
have unrealistic views of how best to manage if this income stream stops
because of a disabling illness or injury, according to new research from
UnumProvident (NYSE: UNM).
The UnumProvident-commissioned study, conducted by Harris Interactive®,
surveyed more than 1,700 working U.S. adults on questions related to disability
and financial planning. Among the findings:
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Nearly two-thirds (64 percent) of working adults place either their homes,
savings/investments or car/boat/vehicle as most valuable assets, as opposed to
income from work.
Reality check: The average salary of a white collar professional is $48,000,
meaning a 30-year-old would earn nearly $1.7 million by retirement age. By
contrast, the average price of a U.S. home is $264,000.
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More working adults (42 percent) would rely on savings to make ends meet than
on any other resource through an extended disabling illness or injury.
Reality check: The average American family maintains just $3,800 in savings. In
fact, the U.S. Department of Commerce reported that Americans actually spent
more than they earned in 2005 – something that hasn’t happened since the Great
Depression.
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The overwhelming majority of workers (97 percent) believe some level of
disability income replacement is necessary. Ironically, just over a third (37
percent) has the coverage.
Reality check: Disability insurance is a very affordable employee benefit. For
every dollar an employer spends on benefits and compensation, an average of 6.7
percent supports health insurance, 0.2 percent supports life insurance, 0.2
percent supports short-term disability and 0.1 percent supports long-term
disability.
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Nearly half of U.S. adult workers (47 percent) thought income replacement
coverage for one year or less was adequate.
Reality check: Industry experience shows that the odds are as high as 1 in 3 of
missing at least three months’ pay due to injury or illness. Once an individual
has been disabled for 90 days, the average length of disability is two years.
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Of those surveyed who carry disability insurance, nearly two in five (37
percent) did not understand that this benefit would replace a portion of income
and help pay for monthly expenses.
Reality check: Disability insurance can provide a level of income replacement
of 50 percent to 100 percent.
“This research points to a clear disconnect,” said Mike Simonds, senior vice
president of product development and marketing for UnumProvident. “Workers
understand that some level of disability income protection is necessary, but
nearly two-thirds of these workers remain uninsured. Given such a clear need,
today’s employers are missing a hidden gem for their benefits packages, and
workers are overlooking a key aspect of financial planning.”
Disability insurance offers a level of income replacement to help protect
against the potential financial impact of a disabling illness or injury. It
helps with an anticipated leave of absence such as a planned surgery or
maternity leave, but also the unplanned such as cancer or an accident.
Bob Taylor, executive director of a new disability industry organization, the
Council for Disability Awareness, sees the lack of awareness about the growing
potential of becoming disabled as a real issue for many workers and their
families. "The likelihood of becoming disabled is on the rise for working
Americans while the financial consequences are growing more severe,” Taylor
said. “Most working folks either don't realize or grossly underestimate how
vulnerable they may be.” The council is trying to raise awareness of these
trends and hopes to help working Americans plan accordingly.
For more information, visit www.disability-101.com
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