Why Disability Insurance Is Getting More Popular

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(Newswire.net — December 15, 2020) — Increasingly, workers are turning to disability insurance as a form of financial protection. More employers are offering disability insurance for their employees, more employees are taking advantage of those programs, and even more people are seeking individual disability insurance protection on their own.

What accounts for this increased popularity? And does disability insurance have the potential to become even more commonplace?

What Is Disability Insurance?

Let’s start by explaining some of the basics of disability insurance. Like other forms of insurance, disability insurance offers a form of financial protection. A policyholder makes regular payments in the form of premiums to the insurance company. In return, the insurance company makes a payout under certain conditions.

Disability insurance can be offered as short-term disability insurance or long-term disability insurance. In both types of policies, payouts are made when an employee is rendered unable to work by an injury, illness or condition. In short-term disability insurance, payouts are designed for disabilities lasting only a few months (usually 3 to 6 months). Here, payouts tend to be higher, at 60 to 80 percent of a person’s typical salary. In long-term disability insurance, payouts are designed for disabilities lasting years—and sometimes a lifetime. Here, payouts tend to be lower, at 40 to 60 percent of a person’s salary.

Disability insurance is offered by most insurance providers. It is available for purchase to any eligible worker in the United States. Many workers also benefit from sponsored disability insurance; their employer offers to pay their premiums (or a portion of their premiums) as a workplace benefit.

So what’s responsible for the increased availability and purchasing of disability insurance?

Rising Healthcare Costs

First, employees are growing more concerned about rising healthcare costs. For decades, the costs of healthcare in the United States have risen. Even with insurance, individuals and families are paying more for basic preventative care—and tending to major injuries and illnesses can be downright financially debilitating.

If you become disabled and no longer able to work, you’ll miss out on a large chunk of your income, but you’ll still be responsible for the daily cost of living. On top of that, you’ll probably have medical bills to deal with. Many workers are afraid of this eventuality, fearing financial ruin. Disability insurance works to protect them.

Employer Availability

In an effort to attract better talent and improve workplace conditions for their employees, more employers are offering disability insurance as a workplace benefit. Historically, health insurance and retirement plans have been the most common benefits offered by full-time employers; today, disability insurance is rivaling them in popularity.

The Gig Economy

Of course, not everyone is a full-time employee. Thanks to the gig economy, more people are making a living as independent contractors, jumping from gig to gig and from client to client. These types of careers can be lucrative, but they also tend to be less stable and subject to higher risks. If you’re disabled and no longer able to do your main line of work, you’ll be in a bad spot. Accordingly, more gig workers are picking up disability insurance policies to protect them in such a situation.

Economic Uncertainty and Job Stability Fears

Modern economic uncertainty may also be playing a role in the increased rates of disability insurance purchasing. Thanks to volatile markets and a rapidly changing economic landscape, more people are concerned about the future of their jobs—as well as their ability to earn a physical living. Disability ensures only one form of financial protection, but it’s still a valuable asset in such an uncertain environment.

More Recognized Forms of Disability

Historically, people were prone to think of disability only in its most extreme forms, such as being paralyzed or falling into a coma. These days, people can be disabled in a much wider variety of ways, and disability insurance companies are recognizing a broader spectrum of potential disabilities. For example, chronic back pain and arthritis may be enough to qualify you for disability payouts, assuming they prevent you from working normally in some way. Accordingly, disability insurance offers more protection than ever before—and people see the benefits more clearly.

Easier Qualifications

These days, almost anyone can qualify for disability insurance. If you’re young and healthy, qualifying is a no-brainer—and you’ll end up with lower premiums due to your low risk of disability as well. If you’re older and nearing retirement, you can still find a policy that works for you. The wide range of available policies attracts a broad swath of the population.

Thanks to these factors and others, disability insurance is likely to remain popular for years to come. If you’re not currently protected by some form of disability insurance, consider getting a quote and seeing how disability insurance could financially protect you.