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Disability Risk and the Value of Disability Insurance

Disability Risk and the Value of Disability Insurance

(p.295) 10 Disability Risk and the Value of Disability Insurance
Health at Older Ages
Amitabh Chandra, Andrew A. Samwick
University of Chicago Press

This chapter evaluates the economic risk associated with a work disability. It specifically covers the magnitude of the disability risk, the extent of precautionary saving for potential disability, and the value of disability insurance. The chapter shows that disability risk is addressed much more effectively through disability insurance. Only small differences across cohorts in disability through the age of fifty-four are observed. Disability rates between older and younger men, and older and younger women, are becoming more similar. A decline in disability for men over the age of fifty-five in the past twenty years is also found. Additionally, the prevalence of a work-limiting disability at a typical age of retirement, across all demographic groups and for the average year in the sample, is 15 percent. The age-disability profile is fairly stable across time and demographic groups.

Keywords:   work disability, economic risk, disability risk, disability insurance, prevalence, age

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