Disability Insurance

Disability Industry

Greater awareness of disability insurance is expected to boost demand

This industry underwrites (i.e. assuming the risk and assigning premiums) disability insurance policies. Disability insurance insures the beneficiary's earned income against the risk that a disability will render them unable to find full-time work in their chosen field. However, if an insured individual is deemed capable of working part time in a different field, they may not realize the full benefit of the insurance policy.

Group disability policies are sold on a short and long-term basis. Short-term disability (STD) policies provide benefits to a claimant in as little as one week after they become disabled for anywhere from a month to a year. Long-term disability (LTD) insurance policies generally start to provide coverage to a claimant between two and three months after they become disabled for a much longer period of time than STD policies cover with benefits in some cases up until the policyholder retires.

Major Players

Disability Carrier Competition

Internal competition in the Disability Insurance industry is high.

Since industry products are typically homogenous, with little product differentiation, the industry has a high degree of price-based competition. Coverage from short-term and long-term disability insurance does not significantly vary from carrier to carrier. Consequently, industry operators primarily compete on price.

Industry operators also compete on brand awareness and financial strength. Since products are homogenous in nature, consumers may opt for an insurance carrier that boasts a strong brand. The quality of service also plays a factor in the decision-making process for consumers. Additionally, industry operators are increasingly offering online services to improve customer-service support.

Average Group Disability Insurance Premium Per Life by Type

Products & Services Segmentation

Disability Insurance Awareness

When most people think about their biggest asset, many think of their home or 401(k) account, but it’s really their lifetime earning potential, which could be in jeopardy if they were to become injured or disabled.

The absence of emergency savings, rising medical costs, and an overall trend of fewer employers offering benefits to workers has created a uniquely challenging time. The pandemic has highlighted how important income protection is, and the potentially severe consequences Americans could face if they had to miss work due to illness, injury or pregnancy.

In 2021, just 14% of Americans said they have disability insurance, down from 31% in 2012. Yet, almost half of Americans — 48% — acknowledge they need disability insurance and 45% of families would face financial hardship within six months if a primary wage earner became disabled and unable to earn income.*

The three most common reasons for not having coverage are:


It is too expensive


Have other financial priorities


Don’t feel I need it

According to LIMRA data, 38% of consumers mistakenly believe that disability insurance pays their full salaries until they can return to work.

Invisible disabilities or chronic illnesses can take away a person's ability to earn a living just as easily as a visible impairment. Chances are, if a person lives long enough, they will most likely experience a disability in their lifetime.

As we have seen from the recent pandemic, life can change quickly. An illness or injury could take away the ability to earn a living. An income in the form of a steady paycheck is your most valuable asset and provides for an individual and their loved ones. Protecting a paycheck with disability insurance can secure a family’s financial future.

*Statistics cited reflect the entire adult population.

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