Why You Need Disability Insurance

There's no way to predict who will become disabled during their working years. Without income, most people's savings and energy are rapidly depleted as they struggle to meet their obligations as they try to get back on their feet.

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Disability Statistics

Accidents and illnesses are facts of life. They can happen to anyone at any time.

And in a second, they can change your life forever.

Consider the following:

The average length of a disability disability lasting more than 90 days is 2.9 years*
The chances of becoming disabled for 90 days or longer at least once prior to age 65 is 1 in 3*
Men have a 43% chance of becoming seriously disabled during their working years.**
Women have a 54% chance of becoming seriously disabled during their working years.**
At age 42, it is four times more likely that you will become disabled than that you will die.**

Take a second to consider your potential future earnings. At an income of $300,000 per year ($25,000 per month) and assuming a 2% raise each year, you have the potential of earning $7,289,210 during your working years (assuming you retire at age 65).

Do I need disability insurance?

Answer "True" if you agree with the following statements or "False" if you disagree.

My investment income represent more than 50% of my total income
My children will not need my financial help for their education
I am prepared to sell my home in the event of financial difficulty
If I were disabled, the government would take care of me financially
I have no expensive hobbies
I do not know anyone who has been disabled for a month or more
My family would happily pay for all my living expenses if I could not do so
My mortgage payment is less than 20% of my income
I could afford to take a two-year vacation

If you answered "False" to any of the above, you should be thinking seriously about disability insurance!

How long do disabilities last on average?

Why should you consider long-term disability insurance? Ninety days is a long time to go without income; it could put a serious drain on your savings. Did you know that it is highly likely that a disability will last more than 90 days? Here are some statistics:

Average Duration of a Long-term Disability at Various Ages
(Disabilities lasting 90 days or more)

AGE AT BEGINNING OF DISABILITY	DURATION

25	2 years, 2 months
30	2 years, 8 months
35	3 years, 1 month
40	3 years, 6 months
45	3 years, 11 months
50	4 years, 2 months
55	4 years, 5 months

Source: 1985 Commissioner’s Disability Table A

Likelihood of death versus long-term disability

Did you know that the financial implications of a disability can be even more disastrous than those of a premature death. Death is certain to occur at some point in your life, while disability may never occur.

For most people, death usually occurs during retirement when they are no longer earning an income. It is during the years you are able to work that the financial impact is more strongly felt if you become disabled or die. The following statistics show that you are more likely to become disabled than to die.

AGE	RATIO
30 35 40 45 50 55	2.31 to 1 2.21 to 1 1.95 to 1 1.69 to 1 1.53 to 1 1.33 to 1

Source : 1985 Commissioners, Disability Individual Table A and 1980 CSO Mortality Table

What is the likelihood of a disability occurring?

A popular belief about disability is that the younger we are, the less likely we are to become disabled. Refer the chart below that shows the probability of having a long- term disability based on age (one lasting more than 90 days before age 65) and the average duration of disability.

Likelihood of Disability Occurring Before Age 65 at Different Ages

Age	Likelihood of long term disability	Average Dur.
30	1 in 3	32 months
40	3 in 10	42 months
50	5 in 22	50 months
60	1 in 10	54 months

Source: 1985 Commissioners, Disability Individual Table A

Disability and your business partner

The chances of a serious disability occurring are significant when there are several partners within a business. In some cases, the disability of a just one partner is enough for a business to suffer financially

The chart below illustrates the chances of a disability lasting 12 months or longer among a group of 1, 2 or3 partners between the ages of 27 and 52.

Average	Number of Partners
Age	1	2	3
27	26.3%	36.7%	45.7%
32	25.6%	35.8%	44.7%
37	24.5%	34.5%	43.1%
42	23.0%	32.4%	40.7%
47	20.7%	29.4%	37.1%
52	17.4%	24.9%	31.7%

Source: "Disability Income, 2nd edition" by Jeff Sadler, published by National Underwriter

Based on the numbers shown above, ignoring the effect of a disability on a business could put you at considerable risk.

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*Sources: 1985 Commissioner's Disability Table A (Experience Table) & CIA 86-92 Aggregate Mortality table
**Sources: "Why Disability" booklet, published by National Underwriter