The Forgotten Policy: The Extreme Risk 10 Million Single Females Take Every Day

Disability Insurance. The policy everyone needs, but few have. Most parents know they need life insurance. Most car owners know they need car insurance (most states even mandate it). But the one thing feeding our financial world, our income, is often the last “asset” we think to protect.  A 2019 study found that 32 million single women, who account for 25% of the American workforce, don’t have nearly the income protection they need.  Ten million of these women admitted they were “extremely unprepared” for a loss of income due to disability and shockingly, 52% of all single, working women, ages 20-65 have NO disability insurance at all. Half of those women said they didn’t know how to get it. [1]

What is even more alarming is that not only are these women not protecting their income, their chances of experiencing a period of disability are very high. More than one in four of today’s 20-year-olds will become disabled for at least one year before age 65. That statistic is staggering. Disabilities aren’t always what we think they are. Although people think of a wheelchair when they hear the word, most disabilities are invisible: cancer, diabetes, multiple sclerosis, depression, anxiety. The list goes on. Ninety percent of disabilities are caused by illness[2]. Only 10% are caused by injury. A long-term (and even a short-term) disability can financially devastate you. Imagine not receiving a paycheck for a year? What about almost 3 years (the average length of a disability according to the CDA¹)? What about never receiving a paycheck again? The thought of being without an income may be scary and most people don’t want to dwell on it.

Few are talking about disability insurance. In addition, there are only a handful of individual disability insurance carriers in existence – in stark contrast to the number of life insurance companies, for example.  So, unless a financial advisor has experience, knowledge, or an expert he or she works with, it’s unlikely they have the support and incentive to properly help their clients buy disability insurance. This is just one way the financial services industry has failed us. The one thing that gives us our financial freedom, our income, is the one thing no one is talking about to half of us! Half! And this doesn’t even account for the other half that has some disability protection but not enough.

What can you do? Talk to your financial advisor about purchasing an “own-occupation” disability insurance policy. This will protect your income and replace up to 60% of it with a tax-free benefit. For example, if your income is $100,000 you could qualify for $5,000 per month of tax-free benefit if you can’t perform the material and substantial duties of your occupation, even if you choose to work in another occupation.  Here’s an example. If a nurse develops chronic back pain and can no longer do her job, she could collect her total tax-free benefit and then could go teach at a nursing school. Her benefit wouldn’t change, and she would earn her new teaching salary on top of her disability benefits. This is real income protection.

When applying for disability insurance, ask for the following “riders”. These enhance the policy and will give you needed additional protection:

• Partial Disability Rider: Most disabilities aren’t total. This rider protects against income loss in times you’re missing some of your income due to disability.
• Cost of Living Adjustment: This rider helps your benefit keep up with inflation.
• Future Income Options / Benefit Updates: This protects your future income so as you earn more, you can protect your income with your health rating from today.
• Catastrophic Disability: Provides additional benefits for severe disabilities that inherently come with increased medical financial obligations.
• Student Loan Rider: Women account for about 66% of outstanding student loan debt[3]. It’s nearly impossible to get out of these obligations. In the event of a disability, this rider will reimburse you for those loans up to $2,500 per month, currently.

Disability insurance is a selfish product. It’s not for those we leave behind like life insurance. It’s for us – Now, when life happens and not everything goes according to plan. What if you are the one in 4 and have no income protection? Disability insurance. The forgotten policy. Get yours.

[1] Council for Disability Awareness, 2019

[2]Integrated Benefits Institute, Health and Productivity Benchmarking 2016 (released November 2017), Long-Term Disability, All Employers. Condition-specific results.

[3] US Department of Education