Approximately two-thirds of surveyed Gen Y workers ages 21 to 31 are
very concerned about their family's financial security if the principle
wage earner is unable to earn an income due to illness or injury, which
may not be surprising given that nearly half this demographic admit they
are living paycheck-to-paycheck. However, the situation is even more
precarious because only about half of Gen Y workers surveyed say they
have any income protected with disability insurance, according to
research collected for MetLife’s 10th Annual
Study of Employee Benefits Trends.
“A disability is not selective – it can happen to anyone, at any time.
If you have people who depend on your income — or if you depend on your
income — you need disability insurance. MetLife research finds that Gen
Y workers are shouldering significant familial responsibilities: 55% say
they are married or in a domestic partnership, 46% are parents of young
children, and 13% provide care for an elderly parent or relative,” said
Clea Barth, vice president, Individual Disability Insurance for MetLife.
“These obligations underscore the importance of understanding how
disability insurance can help build a financial safety net so that
essential expenses could still be paid if the breadwinner is unable to
work due to illness or injury.”
Almost one in four of today’s 20-year-olds will become disabled before
reaching age 67, according to a 2012 Social Security Fact Sheet. It's
less expensive to get disability insurance when you’re young and
healthy. Even among those Gen Y workers who do have coverage, there is a
need to ensure that coverage amounts are adequate. Among those surveyed
for the MetLife study that do have disability insurance, 40% are not
sure what percentage of their income is covered.
A good rule of thumb is to buy enough disability insurance to protect
60% - 80% of after-tax income to cover essential monthly expenses, yet
it is important to do a personal needs assessment. MetLife research
found that almost half of Gen Y workers say they spend 70% or more of
their monthly take home pay on essential expenses and one-fourth are
spending 80% or more.
Getting Started
About seven in ten employers offer some type of disability insurance
coverage, according to the MetLife research, and, as a first step,
employees are encouraged to learn what is available through the
workplace.
“Take advantage of benefits and educational resources offered in the
workplace.