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Since it’s Disability Insurance Awareness Month (DIAM), let’s explore some of the more interesting aspects of disability insurance. At least from a nerdy “I am actually a closet actuary” point of view. One thing about disability insurance that doesn’t get talked about enough is “Why do women pay more than guys?”

I have asked a bunch of insurance people about this in the past and over half were just like “duuuhhh, I dahnno.” And these are the guys that should understand it so that they can get it in their clients hands!

Without getting all uber nerdy (yes, I actually did consult some of my friends that are actuaries on this to get the real mathematically based answers), it is this simple why DI costs more for a woman than a man: because they get disabled more! I know, rocket science. But why?

One is the fact that they can get pregnant and I as a male actually can’t (no, I am not going to try and pull a Schwartzenegger). My wife was on hormone therapy for a while when we were trying to get pregnant, and it did mess up her system a bunch. Not enough to disable her, but in extreme cases that does happen. She was however on full bed rest for several months with our second kid, almost long enough for her disability to kick in. And post partum we had no issues but I know several other new mothers that have had problems, severe enough to keep them out of work for extended periods. Enough to trigger a disability claim. So that is a major reason.

Another is that guys are stupid. Yes, we are stupid enough to do stuff that could get us killed (“hey, watch this!”). We don’t become disabled from this stupidity all that often, but our stupidity and Superman complex carries over into everything else we do. Which includes believing we are invulnerable, and not going to the doctor until it is too late. So instead of becoming disabled like an intelligent female does since they go to the doctor, we men just drop dead. That is why life insurance costs more for us because we live roughly eight years less because of this.

There are other factors that can contribute to the difference in costs between male and female disability insurance, but they are minor in the grand scheme of things. So there you have it: the primer on non-sex neutral disability pricing.

Does this mean if you are a female you should just say “It’s too expensive, guess I won’t get it.” NO! The easiest way around this is to get with other people at your place of employment and purchase your individual disability from a company that offers a multi-life discount (such as Northwestern Mutual, MassMutual, or Guardian). By doing so you can get a discount that generally is large enough to cover the actuarial difference between the sexes, thus eliminating the penalty for actually taking care of yourself. Women are more likely to cooperate in this manner because, well, you’re women and do things together for the common good better than the testosterone fueled alpha males.

DIAM

May 1

May is Disability Insurance Awareness Month, or DIAM.  It is meant to promote an understanding of the realities of disability planning, as opposed to the common myths.  And no, I am not going to go all “Myth Busters” and wrap someone in bubble wrap and drop them off a building to see if the can actually servive, even if it would be cool to do so.

One of the major reasons that disability planning is so much more important than it was even a decade ago is because of science.  That which used to kill us doesn’t anymore.  Heart attacks were once certain death, now peoplw have multiple ones like they do trophy wives.  Cancer is no longer a death sentence.  Congresswoman Giffords wouldn’t have been alive if she went through what she did two decades ago. 

And medical science just keeps getting better.  So things that once killed people ninety percent  of  the time “just” leave them disabled for months or years now.  And that is part of the reason Disability Insurance is so critical: is your nice banker going to say “Gee Phil, glad your chemo is going well.  Because I’m such a stand up guy and the bank has too much money, we’re going to pay for your mortgage until you get back on your feet.”?  Not on this plane of reality.

So Disability Insurance is there to help fill the cash void left because the doctors are doing a better job than what they used to, leaving more people alive but unable to care for themselvves or generate income.  And quite frankly I am glad for their medical advances, because it means some people I care for are still here.  And ecause of proper disability planning they can worry about getting better, not whether they can pay their mortgage.