CHATTANOOGA, Tenn. (Sept. 12, 2006) - Millions of working U.S. adults don´t consider their earning power to be their most valuable asset and have unrealistic views of how best to manage if this income stream stops because of a disabling illness or injury, according to new research from UnumProvident (NYSE: UNM).
The UnumProvident-commissioned study, conducted by Harris Interactive ®, surveyed more than 1,700 working U.S. adults on questions related to disability and financial planning. Among the findings:
Nearly two-thirds (64 percent) of working adults place either their homes, savings/investments or car/boat/vehicle as most valuable assets, as opposed to income from work.
Reality check: The average salary of a white collar professional is $48,000, meaning a 30-year-old would earn nearly $1.7 million by retirement age. By contrast, the average price of a U.S. home is $264,000.
More working adults (42 percent) would rely on savings to make ends meet than on any other resource through an extended disabling illness or injury.
Reality check: The average American family maintains just $3,800 in savings. In fact, the U.S. Department of Commerce reported that Americans actually spent more than they earned in 2005 - something that hasn´t happened since the Great Depression.
The overwhelming majority of workers (97 percent) believe some level of disability income replacement is necessary. Ironically, just over a third (37 percent) has the coverage.
Reality check: Disability insurance is a very affordable employee benefit. For every dollar an employer spends on benefits and compensation, an average of 6.7 percent supports health insurance, 0.2 percent supports life insurance, 0.2 percent supports short-term disability and 0.1 percent supports long-term disability.
Nearly half of U.S. adult workers (47 percent) thought income replacement coverage for one year or less was adequate.
Reality check: Industry experience shows that the odds are as high as 1 in 3 of missing at least three months´ pay due to injury or illness. Once an individual has been disabled for 90 days, the average length of disability is two years.
Of those surveyed who carry disability insurance, nearly two in five (37 percent) did not understand that this benefit would replace a portion of income and help pay for monthly expenses.
Reality check: Disability insurance can provide a level of income replacement of 50 percent to 100 percent.
"This research points to a clear disconnect," said Mike Simonds, senior vice president of product development and marketing for UnumProvident. "Workers understand that some level of disability income protection is necessary, but nearly two-thirds of these workers remain uninsured. Given such a clear need, today´s employers are missing a hidden gem for their benefits packages, and workers are overlooking a key aspect of financial planning."
Disability insurance offers a level of income replacement to help protect against the potential financial impact of a disabling illness or injury. It helps with an anticipated leave of absence such as a planned surgery or maternity leave, but also the unplanned such as cancer or an accident.
Bob Taylor, executive director of a new disability industry organization, the Council for Disability Awareness, sees the lack of awareness about the growing potential of becoming disabled as a real issue for many workers and their families. "The likelihood of becoming disabled is on the rise for working Americans while the financial consequences are growing more severe," Taylor said. "Most working folks either don't realize or grossly underestimate how vulnerable they may be." The council is trying to raise awareness of these trends and hopes to help working Americans plan accordingly.
For more information, visit www.disability-101.com
Average price of home:http://en.wikipedia.org/wiki/Real_estate_pricing, Sept. 8, 2006
Average salary: Bureau of Labor Statistics, National Compensation Survey, 2005
Average savings: Federal Reserve Board's Survey of Consumer Finances, 2004
Cost of coverage: U.S. Department of Labor, Bureau of Labor Statistics, Employee Benefits Survey, 2005
Odds of experiencing disability and average length of disability: Commissioners Group and Individual Disability Basic Tables, Society of Actuaries, 1985 and 1987.
Survey Methodology
Harris Interactive ® conducted this survey on behalf of UnumProvident from August 3-7, 2006, via its QuickQuerySM online omnibus service among 2,682 U.S. adults (aged 18 ), of which 1,761 were employed. Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was also used to adjust for respondents´ propensity to be online. With a pure probability sample of 1,761, one could say with a 95 percent probability that the overall results have a sampling error of /- three percentage points. Sampling error for subsamples would be higher and would vary. However that does not take other sources of error into account. This online survey is not based on a probability sample and therefore no theoretical sampling error can be calculated.
About UnumProvident
UnumProvident (UNM) is the largest provider of group and individual disability income protection insurance in the United States and United Kingdom. Through its subsidiaries, UnumProvident Corporation insures more than 21 million people and paid $6 billion in total benefits to customers in 2005. With primary offices in Chattanooga, Tenn., and Portland, Maine, the company employs approximately 12,000 people worldwide. For more information, visit www.unumprovident.com.
About Harris Interactive
Harris Interactive is the 12th largest and fastest-growing market research firm in the world. The company provides research-driven insights and strategic advice to help its clients make more confident decisions which lead to measurable and enduring improvements in performance. Harris Interactive is widely known for The Harris Poll, one of the longest running, independent opinion polls and for pioneering online market research methods. The company has built what could conceivably be the world´s largest panel of survey respondents, the Harris Poll Online. Harris Interactive serves clients worldwide through its United States, Europe and Asia offices, its wholly-owned subsidiary Novatris in France and through a global network of independent market research firms. The service bureau, HISB, provides its market research industry clients with mixed-mode data collection, panel development services as well as syndicated and tracking research consultation. More information about Harris Interactive may be obtained at www.harrisinteractive.com.