The Great Disability Income Divide: A Gap Between Perception and Reality

Research suggests a need for more employee education about income protection

By SHRM Online staff Jan 14, 2011

There is a severe disconnect between what consumers believe about disability and income protection planning and the facts about those issues, according to The Disability Divide, a January 2011 consumer study released by the not-for-profit Council for Disability Awareness (CDA).

This research for the study, conducted in March 2010, analyzed the responses of 1,006 full-time U.S. employees with household income of $30,000 or more.

Nearly all respondents (90 percent) rated their ability to earn an income as more valuable than any other resource in maintaining financial security. However, only 37 percent said they have thought about taking steps to protect their income.

Perception and Reality

The study identified a major disconnect between the perception and the reality of what causes disabilities. Seventy-one percent of respondents said disability is most likely caused by serious accidents. In reality, insurance statistics show that only 9 percent of long-term disability claims result from serious accidents.

“Even though serious long-term and even permanent disabilities do occur, most income-interrupting disabilities are due to more-common causes like back and joint pain, chronic diseases, cancers, depression and even pregnancy,” said Barry Lundquist, president of the CDA. "This catastrophic view of disability leads many wage earners to conclude that disabilities are far less common than in fact is the case," he noted.

In addition, while the study found that 83 percent of respondents thought that anyone can become disabled at any time, a significant number don’t believe they are at risk. Women think men are most likely to become disabled, but statistics show that across most age groups women are more susceptible.

Impact on Income

Employees do recognize the impact disability can have on their income: 57 percent saw a direct correlation between disability and the inability to earn an income. Yet, 65 percent said if their income stopped they could cover expenses for at most one year. "The fact is, 71 percent of Americans live from paycheck to paycheck, and nearly two-thirds do not have funds earmarked for emergencies," Lundquist remarked.

Need for Education

“These gaps in understanding such a fundamental financial security issue are alarming,” said Lundquist. “Employees need to be better educated on how likely it is that either illness or injury can keep them out of work for a prolonged period of time and how they can protect themselves and their incomes from that risk.”

Employees should be encouraged to talk with their employers and other advisors about what their benefits will cover if they become disabled, he advised, adding, “Understanding is only half the battle; employees must take action to protect their income in case they become sick or injured.

“In today’s world where employees perceive that financial security is more fragile—and more valued—than ever before, we all need to recognize that all financial security ultimately starts with the income stream,” said Lundquist. “Protection of that income stream is more critical than ever before.”

The CDA offers resources and information for consumers, employers, HR personnel and financial advisors to educate themselves and others about the likelihood of disability and its potentially devastating effects. Disability preparedness tools and resources are available at

Related Video:


The Disability Divide
Barry Lundquist, president of the Council of Disability Awareness, says employees have misperceptions about the most likely causes of disabilities.

Related Articles:

Single Employees Less Likely to Have Life, Disability Coverage, SHRM Online Benefits Discipline, December 2010

Cutting Costs with Voluntary Benefits: A Small Business Solution, SHRM Online Benefits Discipline, December 2010

'Calculator' Highlights Financial Risks of Disability for EmployeesSHRM Online Benefits Discipline, September 2010

Quick Links:

SHRM Online Benefits Discipline

SHRM Online Health Care Reform Resource Page

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