The Impact of Permanent Occupational Disability on Expected Life Income in Austria

Human capital is the most important source of income for most people. An unexpected loss of the physical or mental ability to work has a major impact on the expected life-time income of the working population, even accounting for compulsory public disability insurance. The expected net income loss due to disability strongly depends on the occupation chosen and on the age at which the disability occurs. 25-year-olds lose between one-third and slightly more than half of their expected net life income, depending on occupation. With increasing age, the net income loss due to disability slowly decreases. At present, only 4 percent of the working population in Austria are privately insured against disability, and the average sum insured is well below the expected loss of income.