April 2010

Me, disabled?

Should you protect your income in case of disability? No. Unless…

What are the chances you’ll become so disabled that you can’t earn a living for an extended period of time? About 70%. No, wait. Make that 30%. Actually, it depends. On your situation. And even on the statistics you read.

Not surprisingly, most people wonder whether they really need to insure themselves in case it happens to them. And yet, anyone can become disabled.

Some startling figures

Here’s some information that can help you make sense of this. The experts generally refer to statistical charts approved by the Society of Actuaries and known as the Commissioners Disability Tables. Some of the figures are enough to give you pause. Take the following chart, for example:

Probability of a disability lasting at least 90 days
Before age 65

Age Probability
2558 %
3054 %
3550 %
40 48 %
4540 %
5030 %
5523 %

Source: 1985 Commissioners Disability Tables.

More detailed statistics show that the probability is higher for women because of risks related to pregnancy and childbirth. Furthermore, the probability can be as high as 70% – or as low as 10% – depending on your health and lifestyle. But here’s what you should really think about: on average, a disability lasting more than three months is likely to last for three years.

Three years with no income?

The real risk is financial

When you look at it this way, it’s obvious that the real risk of becoming disabled is that you will no longer have the regular income to meet your financial obligations, meaning your mortgage and car payments, your children’s tuition fees, and all the rest of it. Not to mention that a disability can result in new and unexpected expenses for such things as home care or remodelling.

The Council for Disability Awareness, an American organization, has created an online tool that helps you assess the odds that you will become disabled and determine what the associated financial risk could be. You can use the application (available at to determine

  • your Personal Disability Quotient – your chances of not being able to earn an income; and
  • your Earnable Income Quotient – the income you can expect to earn over the course of your career, and which you could lose if you became disabled.

The following is an example:

Personal Disability Quotient

Hypothetical data
Current annual income50 000 $
Anticipated retirement age60
Height1.6 m
Weight54 kg
Type of workPhysical
Existing condition (e.g. chronic back pain)?Yes

Personal Disability Quotient
Chances of being disabled
• for three months or longer70 %
• for five years or longer,
if this person becomes disabled
32 %
Average length of a disability claim
for someone like this
74 mois

Earnable Income Quotient
Total indexed amount this person will earn
before retirement
1 802 500 $

Source: Council for Disability Awareness.

In this example, almost $2 million is at risk and the person has a 70% chance of being unable to generate that kind of income at some point in her life. Numbers like this definitely make you think, particularly given that the main causes of disability are not work accidents, which are usually covered by occupational health and safety boards, but rather chronic ailments, such as cancer and cardiovascular disease.

Ultimately, it is up to each person, in consultation with his or her financial services professional, to assess the risk and decide whether protection is necessary. Given the statistics, thinking about it is the very least one should do.