The demand for disability insurance

Disability insurance is a vital hedge against an unexpected loss in human capital, yet less than half of U.S. households own this type of insurance. This article explores factors that affect demand for disability insurance and investigates the impact of financial sophistication and professional financial advice on insurance ownership. Prior research shows that low financial knowledge, behavioral biases, and other barriers to purchase are related to low demand among households. Using the 2007 Survey of Consumer Finances, we find that demand for disability insurance increases with financial sophis­tication, the use of a financial advisor, and proxies for group insurance availability. Results indicate that low demand for disability insurance can be attributed to both demand and supply factors.