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What Income Ranges Buy Income Protection?

Who is most likely to purchase an personal disability insurance policy from Berkshire Life? What occupations buy disability insurance? What is their income range? A couple of years ago we began compiling data to answer these questions. Some of the answers they found were surprising, while others seemed to fit into the thought patterns of a typical buyer. The following are the results of that study:

Source: All personal policies sold from January 1, 2001 to January 1, 2018 through the agents using DisabilityQuotes.com across the United States. Total policies sold was 22,868.
Income RangePercentage of Policies Purchased
What Income Ranges Purchase Berkshire Disability Insurance Policies

$0 - $50,000 Income Range One of the surprising finds was the number of people who purchased disability insurance policies in the $0-$50,000 income range. 32% of all policies sold during the last decade fell within this income range. As a seasoned professional with over 20 years of experience, I can tell you that most people making less than $50,000 annually don’t purchase individual policies due to the cost. Most need all of their income just for basic living expenses. 

After further review, a simple answer emerged; resident physicians purchased many of these policies. Those touting the importance of this product bombard resident physicians in medical school. These young men and women understand that their incomes will increase significantly once they begin practicing and that a long-term disability could cause a potential loss of income over their lifetimes in the multiple millions.

$50,000 - $150,000 Income Range The income ranges with a large percentage of policies purchased are between $50,000-$150,000. About 33% of all policies purchased fell within these income ranges. This includes disability insurance for physicians, and other professionals such as dentists, engineers, attorneys and executives. In addition, this group included many real estate agents, business owners and architects. These are people that tend to have higher levels of education and truly understand the consequences of not having the proper plan in place. 

$200,000-$500,000 Another 20% of all policies purchased during this period fell within this income range. Again, what we have found is that these people are mostly professionals. The main difference is that within this group, there is a sub-class of professionals represented mostly by the next highest income bracket. 

For example, within the medical community those that purchased policies were surgeons, anesthesiologists, cardiologists, radiologists and emergency room physicians. For attorneys, many of them are partners or work in high profile law firms. The executives within this category work primarily for larger corporations that can afford to pay them a higher income.

$500,000 - $1.5M At the very high end of the spectrum, those making $500,000-$1,500,000, almost all of them are doctors, executives, financial advisors and attorneys.

As you can see in the above chart, the majority of all policies were purchased by those making less than $200,000. According to the 2010 United States Census, 95% of all incomes in this country are below $181,000. So it makes perfect sense that in the higher incomes, the reason the percent of policies sold is so low, is that there are so few people in this country making that much money.

In regard to the most common occupations of those purchasing policies through this website, there is a pattern that they consist of mostly professionals such as doctors, attorneys, engineers, etc. I believe the reason for this is two-fold. 

First of all, they tend to have higher incomes than the average worker in the United States and it may be easier for them to afford this coverage. Secondly, they tend to use a financial professional more often than those at the lower income scales. A good financial professional will almost always suggest that their clients have sufficient protection in place. 

Who should buy disability insurance? In my opinion, anyone that depends on his or her income. After all, if you were to become disabled, how would you pay the bills if you did not have a paycheck? If you are making $50,000 annually, is your income less important to you than it would be for someone making $500,000? Of course not! 

Imagine, for a moment, the terrible: a debilitating accident, a crippling sports injury, a degenerative disease… Would you rather compound your disability with a loss of income and quickly growing expenses or be consoled by the safety net you’ve secured for yourself?

Laurence J Laskin holds a Financial Representative contract with The Guardian Life Insurance Company of America based out of New York, NY.

The information displayed on this page are the opinions and views of the author, and are not necessarily the opinions and views of The Guardian Life Insurance Company of America (Guardian), or any company that is an affiliate or subsidiary of Guardian. 

2018-52272 Exp 01/20

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