According to the Social Security Administration, nearly sevenout of 10 workers, or about 100 million people, do not have long-term disabilitycoverage.

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Independent and insurance industry data suggest far more workerswill need the protection than have it. The SSA estimates thatmore than one-quarter of 20-year-olds will be disabled atsome point in their working careers. The Insurance InformationInstitute, a provider of industry-funded research, says 43 percent of workers age 40 will suffer adisabling event lasting 90 days or more by the age of 65.

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Employers are, of course, required to provide some disabilityprotections in the form of workers' compensation coverage. But datafrom a 2014 LIMRA study show that 90 percent of disabling accidents or illnesses arenot work-related, and therefore not covered by workers'comp.

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Evidence of employers shifting disability to a voluntaryoffering

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Data from the Council for Disability Awareness, a nonprofitfunded by the majority of disability insurance providers, suggestsfewer employers are providing long-term disability as a corebenefit.

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CDA's 2014 Long Term Disability Claims Review shows thatin 2009, a little more than 220,000 employersoffered employer-paid disability protection; by 2013, thatnumber had dropped to 214,000.

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The study did not break down data by employer size, but forcontext, the Small Business Administration says there were about 18,500 businesses with 500 or moreemployees in 2010, and of the 27.9 million small businesses,5.5 million have an employee.

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Nor did the study track what portion of the disability policieswere employer-paid, but other results from CDA's research suggeststhat more employers are offering disability protection on avoluntary basis. In 2012 and 2013, there was a slight increase inthe number of employers offering disability policies, after severalyears of decline. But in 2013, the number of covered employeesdropped by 1.5 percent, to about 32 million.

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CDA's researchers do not make a definitive correlation betweenthe drop in covered lives and the migration of disability plans toa voluntary offering, but they do say the trend in lower coveragecould be the result of more plans being offered on a voluntarybasis, and eligible participants not electing to buy thepolicies.

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Number of DI claims down, but carriersshelling out more bucks

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In 2013, the most recent data available from CDA, 19 disabilitycarriers reported that about 653,000 people were receivinglong-term disability benefits — a 3 percent decrease from theprevious year and the lowest level since 2008.

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While individual claims were down, total payments by insurancecarriers hit $9.8 billion, an increase from 2012 and a more than 7percent increase over 2009.

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About 150,000 new claims were approved in 2013, down almost 6percent from the previous year, which insurers attribute to lowerclaim applications and an improved economy, according to CDA'sresearch. Nearly 60 percent of those claims were filed by workersover age 50. Musculoskeletal issues are the greatest source ofclaims, accounting for 29 percent of existing disabilities,followed by nervous system, cardiovascular and cancer-relatedclaims. According to 2012 research from insurer Gen Re, the average length of a claim for participants in agroup disability plan was 34.6 months.

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A tool for brokers

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So why do tens of millions of workers go without disabilityprotection? The simple answer is, they don't think they needit.

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According to the Social Security Administration, two-thirds of wage earners say they have a 2percent chance or less of being disabled for three months ormore during their working career, far less than the 25 percentchance the SSA says workers actually have.

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Others may be under the impression that Social Security'sDisability Insurance program provides the necessary coverage. Butin 2012, 65 percent of the claims to SSDI, a program on thebrink of insolvency, were denied. When the government doesaccept claims, the average monthly benefit was about $1,200 for amale and less than $1,000 for a female.

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The Council for Disability Awareness created a PersonalDisability Quotient brokers can use to help individual participantsestimate their chances of becoming disabled. Age, weight andgeneral information on work environment and lifestyle are used toestimate the chances an individual has of becoming disabled intheir working career.

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For example, a typical 35-year-old, non-smoking female ofaverage size and weight who works an office job has a 24 percentchance of being disabled for three months or longer in her career,and there is an almost 40 percent chance that her disability willlast five years or longer.

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A male of the same age and circumstance who leads a healthylifestyle has a 21 percent chance of being disabled for threemonths or longer. Those chances increase substantially when tobaccouse and obesity are factored.

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To see the Personal Disability Quotient tool, brokers can go towhatsmypdq.org.

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