Disability Insurance News
Nov. 27, 2006: Boomers Shy Away From Paying for Income Protection
With the most to protect (their retirements), boomers are often in the group most reluctant to pay for disability insurance. Fearing high costs of the policies and believing they are already secure, many boomers are failing to guard their current income and their retirement income, according to a Nov. 27, 2006 article on The National Underwriter Life and Health Web site.[1]
Also, older boomers tend to gamble that their luck will last until they can collect Social Security and retirement benefits – which are some high stakes to play with.
"I don't think that's a wise strategy," says Matthew Gottfried, director of individual disability income at Berkshire Life Insurance Company of America, Pittsfield, Mass. "There's too much at risk."
Researchers at Berkshire, a unit of Guardian Life Insurance Company of America, New York, have studied boomer disability resistance. They surveyed 1,072 U.S. adults ages 18 and older. Of those surveyed, only 56 percent of boomers ages 45 to 54 and only 56 percent of adults ages 55 to 64 said they are willing to pay for disability coverage. This compares with more than 75 percent of adults ages 18 to 44.
Boomers tend to believe that they have enough savings set aside to cope with loss of income for at least a few months. However, by purchasing extra disability insurance coverage to protect boomers' retirement plan assets, they are guaranteed more coverage and security in case of calamity.
The researchers who conducted the Berkshire disability survey note that 75 percent of the participants said they review their automobile insurance policies at least once a year, but only 54 percent said they review their disability insurance that often, cited the article.
Part of the reason why boomers are refusing the disability policies is the extra costs they associate with it. About half of them think disability insurance would cost 5 percent or more of their income, and more than a quarter think disability insurance would eat up 10 percent or more of their income, according to the Berkshire survey data. However, the typical cost is closer to 2 percent of the insured's income, Berkshire researchers estimate.
References
- Bell, Allison. "Boomers Shy Away From Paying for Income Protection," The National Underwriter Life and Health Web site, Nov. 27, 2006. http://www.lifeandhealthinsurancenews.com/