A recent study was performed on the impact of disability by the consulting firm, Milliman, Inc. that highlights many misconceptions Americans have about the impact a disability can have on their lives. I noted with interest several myths the study rebuked:
- Disability insurance is more important for married people – FALSE. The study shows that the financial impact of a disability is, in fact, significantly greater for non-married individuals than for those who are married to a working spouse. Typically, only a portion of the total household income is lost when a married individual becomes disabled, according to the study. Additionally, a single person might lose their medical insurance while, for the married person, it still might be available through the spouse’s employer.
- The financial impact of disability is much higher at higher incomes – FALSE. Actually, the impact is much greater at lower incomes. This is because the added healthcare costs incurred during the disability are a greater portion of income at lower income levels. Also, according to the study, the tax savings from reduced income is proportionately greater for individuals earning higher income prior to disability.
- The financial impact of disability reduces over time – FALSE. Again, the reverse is true – the financial impact actually increases over time, because both incomes and expenses tend to increase with inflation.