The Disability Disconnect: Workers Ill-Prepared to Manage Disruption in Income; UnumProvident research points to lack of knowledge about financial risk

Business Wire, Sept 12, 2006

CHATTANOOGA, Tenn. -- Millions of working U.S. adults don't consider their earning power to be their most valuable asset and have unrealistic views of how best to manage if this income stream stops because of a disabling illness or injury, according to new research from UnumProvident (NYSE: UNM).

The UnumProvident-commissioned study, conducted by Harris Interactive(R), surveyed more than 1,700 working U.S. adults on questions related to disability and financial planning. Among the findings:

--  Nearly two-thirds (64 percent) of working adults place either
        their homes, savings/investments or car/boat/vehicle as most
        valuable assets, as opposed to income from work.

        Reality check: The average salary of a white collar
        professional is $48,000, meaning a 30-year-old would earn
        nearly $1.7 million by retirement age. By contrast, the
        average price of a U.S. home is $264,000.

    --  More working adults (42 percent) would rely on savings to make
        ends meet than on any other resource through an extended
        disabling illness or injury.

        Reality check: The average American family maintains just
        $3,800 in savings. In fact, the U.S. Department of Commerce
        reported that Americans actually spent more than they earned
        in 2005 - something that hasn't happened since the Great
        Depression.

    --  The overwhelming majority of workers (97 percent) believe some
        level of disability income replacement is necessary.
        Ironically, just over a third (37 percent) has the coverage.

        Reality check: Disability insurance is a very affordable
        employee benefit. For every dollar an employer spends on
        benefits and compensation, an average of 6.7 percent supports
        health insurance, 0.2 percent supports life insurance, 0.2
        percent supports short-term disability and 0.1 percent
        supports long-term disability.

    --  Nearly half of U.S. adult workers (47 percent) thought income
        replacement coverage for one year or less was adequate.

        Reality check: Industry experience shows that the odds are as
        high as 1 in 3 of missing at least three months' pay due to
        injury or illness. Once an individual has been disabled for 90
        days, the average length of disability is two years.

    --  Of those surveyed who carry disability insurance, nearly two
        in five (37 percent) did not understand that this benefit
        would replace a portion of income and help pay for monthly
        expenses.

        Reality check: Disability insurance can provide a level of
        income replacement of 50 percent to 100 percent.

"This research points to a clear disconnect," said Mike Simonds, senior vice president of product development and marketing for UnumProvident. "Workers understand that some level of disability income protection is necessary, but nearly two-thirds of these workers remain uninsured. Given such a clear need, today's employers are missing a hidden gem for their benefits packages, and workers are overlooking a key aspect of financial planning."

Disability insurance offers a level of income replacement to help protect against the potential financial impact of a disabling illness or injury. It helps with an anticipated leave of absence such as a planned surgery or maternity leave, but also the unplanned such as cancer or an accident.

Bob Taylor, executive director of a new disability industry organization, the Council for Disability Awareness, sees the lack of awareness about the growing potential of becoming disabled as a real issue for many workers and their families. "The likelihood of becoming disabled is on the rise for working Americans while the financial consequences are growing more severe," Taylor said. "Most working folks either don't realize or grossly underestimate how vulnerable they may be." The council is trying to raise awareness of these trends and hopes to help working Americans plan accordingly.

For more information, visit www.disability-101.com

Average price of home: http://en.wikipedia.org/wiki/Real_estate_pricing, Sept. 8, 2006

Average salary: Bureau of Labor Statistics, National Compensation Survey, 2005

Average savings: Federal Reserve Board's Survey of Consumer Finances, 2004

Cost of coverage: U.S. Department of Labor, Bureau of Labor Statistics, Employee Benefits Survey, 2005

Odds of experiencing disability and average length of disability: Commissioners Group and Individual Disability Basic Tables, Society of Actuaries, 1985 and 1987.

Survey Methodology

Harris Interactive(R) conducted this survey on behalf of UnumProvident from August 3-7, 2006, via its QuickQuery(SM) online omnibus service among 2,682 U.S. adults (aged 18 ), of which 1,761 were employed. Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was also used to adjust for respondents' propensity to be online. With a pure probability sample of 1,761, one could say with a 95 percent probability that the overall results have a sampling error of /- three percentage points. Sampling error for subsamples would be higher and would vary. However that does not take other sources of error into account. This online survey is not based on a probability sample and therefore no theoretical sampling error can be calculated.