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The U.S. Social Security Administration estimates that one in
four of today's 20-year-olds will become disabled before they retire
-- a probability higher than most realize.
According to the findings of a new study by The State Farm Center
for Women and Financial Services at The American College -- the
nation's leading authority on economic issues and opportunities for
American women -- most people lack knowledge about the health risks,
consequences and financial preparation needed to face a disability.
"Our research revealed a great need to educate Americans,
particularly women, about the high incidence of disability, and the
need to better prepare for the financial impact that a disability
can have on lives and families, says Professor Mary Quist-Newins,
ChFC, CLU, CFP, director of The State Farm Center for Women and
Financial Services at The American College. "For most Americans,
their ability to earn an income is their most valuable asset and few
have planned for the loss of this ability, putting their financial
futures at great risk."
In conjunction with Disability Insurance Awareness Month and The
American College's new study, here are five facts about disability
that many Americans may find surprising:
Fact 1: Leading cause of disability often mistaken
The overwhelming majority of respondents (97 percent) failed to
correctly identify arthritis as the leading cause of disability. The
largest group of respondents, 30 percent, misidentified "accidents"
as the leading cause. In reality, work-related accidents account for
less than 5 percent of disabilities. The remaining 95 percent are
caused by chronic illnesses, according to the Council for Disability
Awareness.
Fact 2: Women's higher incidence of disability unacknowledged
The Centers for Disease Control and Prevention have found higher
rates of disability reported by females across all age groups when
compared to males. Arthritis disproportionally impacts women,
leaving them particularly vulnerable to financial hardship stemming
from a loss or reduction of income. More women (18 percent) also
express greater concern about the impact a disability could have on
their financial situation versus men (12 percent), according to The
American College survey.
Fact 3: Financial consequences of disability can be severe
Most people are unaware of the earning power that is lost over a
lifetime if a disability occurs. For example, someone with an annual
income of $50,000, who works for 40 years, is projected to make more
than $2 million in future earnings. A loss of these earnings can be
detrimental for an individual or family's livelihood and future.
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 These financial consequences may be even more alarming for women.
Women (22 percent) are almost twice as likely as men (12 percent) to
think their cash reserves would last less than one month if faced
with a disability. Unmarried women have an even bleaker outlook.
Fact 4: Most lack financial plans to deal with disability
Dealing with a disability could halt savings for retirement, a
child's college education, funds for medical care and even basic
living expenses. In fact, most survey respondents plan to rely on
savings to replace their income (71 percent), although most admit
their cash reserves would run out in less than six months.
Fact 5: Most people are uninformed about disability insurance
coverage
Sixty-one percent of women and almost half of men (46 percent)
have never researched disability insurance and less than 10 percent
of people have purchased individual disability insurance plans.
Almost half of employed individuals obtain disability policies
through their employers, but most don't feel knowledgeable about
their policies.
Only four in ten Americans are aware that disability insurance
payments last for a specified period of time -- not for as long as a
person is disabled or unable to work -- and just 27 percent of
people know that employer-provided benefits are typically taxed.
Take the next step
While it's impossible to be prepared for all that life throws at
us, it is possible to be proactive and start putting a financial
action plan in place for an expected illness or disability that may
someday impact you or your family.
You can learn more about The State Farm Center for Women and
Financial Services at The American College and this landmark
disability study by viewing a recent interview with Professor Mary-Quist
Newins, taking a disability awareness quiz or reading a full report
at
womenscenter.theamericancollege.edu/
primary-research.
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The preceding information has been provided by The State Farm
Center for Women and Financial Services at The American College.
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