COVID-19 Fueled Greater Interest In Long-Term DI, Survey Shows

The COVID-19 pandemic apparently fueled an interested in long-term disability insurance, according to a survey by DI insurtech Breeze.

Average monthly benefits and annual premiums for long-term disability insurance increased more than 20% in 2021 compared to the previous year.

The results of the Breeze survey found consumers seeking much more disability coverage (23% increase year-over-year), and concluded it was likely pandemic-related.

“After seeing the COVID-19 pandemic cause unimaginable devastation in 2020,” the report said, “consumers were more aware than ever before of the possibility of a sudden injury or illness that can upend everyday life and leave them financially vulnerable.”

Life insurers have reported similar findings.

“We theorize the pandemic is behind the increase,” said Mike Brown, director of communications for Breeze. “Two years in and it seems as though it played a part in people looking for more coverage. It caused people to realize it could happen to them and they need to protect their financial interests.”

Brown said the Breeze survey may be the most robust long-term DI pricing data available because it’s based on real quotes over a two-year span from consumers of all different backgrounds. In 2020, the average annual premium for long term disability insurance was $1,084 (or $90.33 monthly). Comparatively, the annual premium jumped to $1,297 in 2021 (or $108.11 monthly).

The Breeze survey correlated with data showing only 14% of Americans own disability insurance compared with 54% who own life insurance. Consumer awareness of disability insurance is lacking, the report said, as more consumers believe that workers’ compensation or Social Security will protect them, despite statistics showing two-thirds of disabling accidents happen off the job.

The survey breakdown of age and gender showed several diverging factors in coverage and premiums. For example, the average annual premium in 2021 for the 18-to-24 age group was $451. For the 45-to-54 cohort, it was $1,800.

In both 2020 and 2021, the average annual premium for women was higher than for men.  The report said this is because women are more likely than men are to suffer disabilities that impact their careers, such as breast cancer, autoimmune disorders and depression. Disability claims for women also typically last longer than those for men. Thirty-year-old women have a 57% chance of becoming disabled and only a 16% chance of dying before age 65, according to statistics.

The report also found New Jersey, California, Nevada, and Hawaii had the highest average annual DI premium in the US (average $1,668). While Vermont, Nebraska and New Mexico had the lowest ($753).

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].