Need a Break from Your Job? 70% of Working Adults Say They Couldn’t Take More than One Month of Unpaid Vacation Before Running Out of Money
New Survey from LIFE Foundation Reveals Alarming Lack of Savings and Overwhelming Need for Disability Insurance among Americans
Washington, D.C. – May 23, 2006 – As Memorial Day approaches and thoughts turn to summer vacations, many will tell you that there’s no such thing as too much time off from work. But what if your summer vacation didn’t come with a paycheck?
According to a new survey by the non-profit LIFE Foundation, 70 percent of working American adults say they could only afford to take off one month or less of unpaid vacation before everyday expenses would force them to return to work. Americas Health Insurance Plans however, reports that nearly one out of every three workers over the age of 30 will suffer a disability for three months or more at some point in their career – making that “unpaid break” a possibility for millions.
“The reality is that most Americans lack the financial cushion necessary to weather an unexpected disability – which might stop your paycheck, but won’t stop your bills.” said David F. Woods, CLU, ChFC, president of the non-profit LIFE Foundation. “People don’t think twice about insuring their home or their car but millions overlook the importance of protecting their most valuable asset, their ability to earn a living. Having the right amount and kind of coverage in place can make all the difference.”
Nineteen percent of respondents said that two weeks would be the most they could afford to take off and not get paid, assuming that their job would be there for them when they returned. The same number of respondents said they could only afford to take off one week, while eight percent said that they could not afford to take any time off. Ten percent of respondents said they could take off three to six months, yet only five percent said that they could afford to take off more than a year.
In support of Disability Insurance Awareness Month in May, LIFE offers three easy steps to help people review their disability insurance needs and make sure that they have an adequate amount of coverage. LIFE’s online disability needs calculator (www.life-line.org/disabilitycalculator) provides a simple worksheet that can also help get people started.
- Step One: Know what sources of supplemental income are already available to you. This includes current income protection offered by your employer or the government, your spouse’s income and your current savings and investments. Carefully review the tax implications and restrictions of your group disability insurance coverage, Workers Compensation and Social Security benefits.
- Step Two: Calculate your monthly expenses. When a person becomes disabled their income stops, but their expenses may stay the same or even increase. Think about how much your family spends month to month, then consider additional costs you might incur because of your disability, such as physical therapy, modifications to your car or home, or healthcare costs not covered by your health plan. If that amount is more than what you have available to you in savings or other sources of supplemental income, you should think about purchasing additional disability insurance.
- Step Three: Seek the advice of a professional to find a policy that is right for you. The best way to determine how much disability insurance you need is to meet with a qualified insurance professional, who can conduct a thorough needs analysis and answer your questions. Policies can differ by provider, so it is important that you understand how a disability is defined, when proceeds are paid out and other conditions that may impact the benefits you receive.
The LIFE survey was conducted by KRC Research between May 11-14, 2006, and asked 590 Americans, who were above the age of 18 and currently employed full-time or part-time, how long of an unpaid vacation they could afford to take before they would start running out of money and need to return to work to pay the bills.
For additional information about disability insurance and other helpful tips, visit LIFE’s website at www.life-line.org and check out the section devoted to disability insurance.
The Life and Health Insurance Foundation for Education (LIFE) was founded in 1994 in response to the public’s growing need for information and education on life, health, disability and long-term care insurance. LIFE also seeks to remind people of the important role insurance professionals perform in helping families, businesses and individuals find the insurance products that best fit their needs. To learn more about these topics, please visit www.life-line.org.
| Jason Adler
| Brooke Parker