According to a recent study by Guardian Life Insurance Company, Americans may think disability insurance costs more than it really does.
In fact, close to one-third of consumers are willing to pay more than is really necessary to protect their income. More than 30 percent said they are prepared to pay more than 10 percent of their monthly salary for disability income protection. But income protection for most individuals actually costs closer to 2 percent of their monthly salary.
“The Guardian survey shows that people tend to overestimate the cost of disability insurance. That may be because disability insurance is often described as expensive in articles and news reports. But expensive is a relative word,” said Matthew Gottfried, director of individual disability income at Berkshire Life Insurance Company of America, a wholly owned stock subsidiary of Guardian.
The survey also showed that 62 percent of men versus 55 percent of women said they understand their disability insurance coverage extremely or very well. And 1 in 4 of those ages 55 to 64 said they do not understand their disability insurance coverage. These are people who are relatively close in retirement age and would have less time to recover retirement savings lost due to a disruption in work caused by illness or injury.