A new study by the State Farm Center for Women and Financial Services at The American College, revealed five trends about disabilities, their risks and related consequences.
While this is U.S.-based research, there are important insights that you might want to consider.
- The leading cause of disability is arthritis and it’s often mistaken. The overwhelming majority of survey respondents (97%) failed to correctly identify arthritis as the leading cause of disability, more frequently citing accidents and work-related injuries instead. In reality, work-related accidents account for less than 5% of disability, and the rest are caused by chronic illnesses, according to the Council for Disability Awareness.
- Women are particularly at risk. The CDC confirms females across all age groups report higher disability rates than males. As the leading cause of disability, arthritis disproportionately impacts women, leaving them especially vulnerable to financial hardship stemming from a loss or reduction of income. The study found few are prepared.
- Financial consequences of disability can be severe, especially for women. A person 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 devastating for an individual or family’s livelihood. The financial consequences are more alarming for women. Women (22%) are almost twice as likely as men (12%) to think their cash reserves would last less than a month. Unmarried women have an even bleaker outlook.
- Most lack financial plans to deal with disability. Fifty-nine percent of men and 63% of women are not concerned about becoming disabled and being unable to work for a year. Most say they would rely on cash reserves if they became disabled. However, nearly three in four (71%) respondents from the survey say their cash reserves would last less than a year.
- Many are uninformed about their disability coverage. Sixty-one percent of women and almost half of men (46%) have never researched disability insurance. Almost half of employed individuals obtain disability policies through their employers, but most don’t feel knowledgeable about their policies. Four in ten are aware that disability insurance payments only last for a specified period of time.
“Our research revealed a great need for people, especially women, to be better educated about the risk of disability, and to be better prepared for the potentially devastating impact that a disability can have on their lives and families,” said Mary Quist-Newins, director of The State Farm Center for Women and Financial Services at the American College.
“For most, their ability to earn an income is their most valuable asset and few have planned for this possibility, putting their financial futures at substantial risk,” she says.