Why Americans Don’t Protect Their Income

One-third of working adults and 40 percent of Millennials would consider buying disability income insurance if they knew more about it, according to the Council for Disability Awareness’ report, “America’s Income Protection Picture.” CDA is a nonprofit organization dedicated to educating the American public about the chances of experiencing an income-interrupting illness, injury or surgery, and how to have a plan for these times.

Despite the fact that income provides the means to make all of life’s necessary purchases, 57 percent of survey respondents said they lack DI insurance. According to the survey, the top three reasons consumers cited for not having DI insurance were: 

  1. “I can’t afford it.” (33%)
  2. “I’ve never thought about it.” (30%)
  3. “I don’t know enough about it.” (24%)

Here are a few things financial advisors can learn from the survey:

  • Cost outweighs income. The majority of survey respondents said they greatly value their income. Yet, many aren’t willing to face what they perceive as the costs of disability coverage. In fact, 41 percent of respondents said they would consider buying disability insurance if it was less expensive. Millennials in particular were more likely to overestimate the cost of DI insurance than other age groups.
  • Risks are cloudy. While the majority of respondents say they recognize they could temporarily lose their income because of an illness, injury, surgery or pregnancy complications, 27 percent felt they were more at risk of being audited by the IRS. The actual odds: 1 percent for an audit vs. 25 percent for being out of work for a period of time.
  • Solutions are available. Half of working adults say they would tap into savings or investments if their income were to stop. Millennials in particular say they would borrow money from friends and family, but those over age 50 indicated they’d access government programs or retirement savings to replace their income.

What advisors can do

The following are some of the steps you can take as a financial advisor, according to the survey:

  • Emphasize value, not cost. Most consumers can’t afford to be without an income stream–and a way to protect it, especially if their family depends on their paycheck. We need to help workers think through how they would pay their bills if they were out of work.
  • Contextualize the risk. Stories have more impact than numbers. Share real-life examples with clients and show them from experience what can happen if they don’t insure at least a portion of their income.
  • Outline solutions. Explain to clients why relying on savings, family and friends, retirement accounts or government programs is often short-term and inadequate. Instead, help them review their options (e.g., employer-provided or individual disability insurance, critical illness insurance, accident insurance, etc.) and select the best plan to keep their income protected.

“Income protection is a key component of a sound financial plan,” said Carol Harnett, CDA’s president. “Our survey showed consumers value their income, but are confused about how to maintain an income stream when they’re temporarily out of work for any number of reasons related to their health.”

Wakefield Research conducted the survey using an email invitation and online survey between May 28, 2014, and June 9, 2014. The 1,000 participants met the following criteria: U.S. residents, employed full-time in the private sector, between the ages of 21 and 68, with a household income of $25,000 or more. Access the full report, including practical steps to educate consumers, at: http://disabilitycanhappen.org/research/consumer2014/.


By Ayo Mseka


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  2. Good suggestions.all. “24%” does not constitute “1/3”, however 33% does. Kind of a sloppy way to start things off like that, especially when everyone is (justifiably) suspicious about social research statistics anyway.. Most of this article contains good information, but it’s not very insightful. First, in my opinion, people don’t buy disability income insurance because they think they already are “covered at work”. Wrong-o. Define “covered”. A dear friend of mine received benefits for a total disability for two years and was then “laid off”. End of employee-paid benefit. Then, she was declined (predictably) by SSA. I don’t think “soft selling” DI works. You are correct about touting value, but it has to be in more concrete, realistic language, such as, “Look, this is the cost of being employed and healthy enough to qualify for the coverage. We can keep the costs down, but I’m not moving beyond this risk exposure until you buy at least some kind of personally owned income replacement coverage with a future increase benefit option from me or someone else. I’m sorry, but that’s just how important it is. You can ‘think about it’ while you’re in underwriting. I’ll help you with any kind of research you want. Sign here.” If the prospect’s answer is an unqualified “no”, have a form ready for signature that says something like “My advising professional strongly recommended that the risk of loss of ability to work have severe financial consequences to me (and my family), and I chose to decline completing an application.” Date and keep – forever. I would much rather have a young bread-winner, young single, or especially a young career woman buy personally owned DI than life insurance. That can come after the DI is in place. Life insurance is an entirely different kind of discussion.