Disability insurance is not the 1st thing that anyone wants to talk about. Canadians generally are more comfortable talking about life insurance or critical illness insurance than the ability to protect their income during their prime earning years.
The reality is 1 in 7 Canadians have indicated they have had a disability and 33% of workers between the ages of 30 to 64 will experience a disability greater than 90 days. Furthermore, less than 10% of disability claims are due to accidents; most are due to illness.
Canadians take their ability to earn an income for granted! If you buy insurance for other assets in your life (house, car, cottage, boat, jewellery, art, etc.) why would you not want to protect your most valuable asset –you. The quality of life you have built and become accustomed to for you and your family will be difficult to maintain without a regular paycheck
Disability insurance or income protection insurance are most often purchased privately or under an association or employee benefit plan. The insurance company agrees to insure you for a percentage of your income under a group plan or a fixed dollar amount per month with a private plan. The plans cover a disability due to accident or sickness and have a waiting period before the monthly income benefit will start. Disability benefits are generally paid until you return to good health or until the end of the disability coverage whichever comes first. The disability benefit is usually tax-free as long as you paid the premiums for the coverage.
Definitions of disability can be complex and vary according to the type of plan you have. Group employee benefits, association plans and private plans will have various levels of definitions, benefits and optional coverages. Individual disability plans are owned by you, contractual and non-cancellable. The coverage is portable and can move with you to various careers and premiums are guaranteed not to increase unless you opt to change or add to the coverage. Private disability plans can offer a refund of premium benefit over time and generally provide coverage to age 65.
Anyone interesting reviewing the best type of disability coverage for themselves should consult a professional life insurance advisor to tailor a plan to meet their personal needs. Make sure your earning potential is protected