Disability Insurance
What is Disability insurance?
The definition of a disability can vary between insurance companies. The definition can even vary between different insurance plans from the same company.
Some disability plans may also require you take part in a rehabilitation program if they can help you get back to work.
Check with your insurance plan administrator or insurance agent to learn your plan’s definition of disability
What to consider when buying disability insurance?
If you're considering disability insurance, make sure you:
- check with your employer to see if you already have group disability coverage with your employer's plan
- shop around, especially if you're considering private disability insurance
Consider group insurance offered through a union, guild, or professional or alumni association. Premiums for this type of coverage usually increase as you get older. You'll need to renew your insurance every few years.
Critical illness varies by company and policy, but usually includes the big three – cancer, heart attack and stroke – as well as:
- Coronary artery by-pass surgery
- Kidney failure
- Major organ failure
- Blindness
- Deafness
- Loss of speech
- Paralysis
- Motor neuron disease
- Multiple Sclerosis
- Coma
- Alzheimer’s disease
- Parkinson’s disease
- Occupational HIV
Short-term disability insurance
Short-term disability coverage typically provides benefits for up to 6 months while you're sick or injured.
If your employer has a short-term disability plan, your claim must be made through your disability plan. Employers aren't required to provide paid sick leave and each employer is different.
Speak with your employer’s human resources staff for details on your plan including any sick time or vacation time policies that might apply.
If you don't have short-term disability coverage and your employer does not offer one, you may be eligible for Employment Insurance (EI) sickness benefits.
To be eligible for EI sickness benefits, you must:
- usually have used all of your sick leave
- have worked enough hours
Long-term disability insurance
Long-term disability insurance benefits generally begin when the following benefits end:
- short-term disability insurance
- sick leave benefits from your employer
- EI benefits
Most long-term disability plans will replace 60% to 70% of your normal income.
Each disability plan is different. Some may provide disability benefits for up to two years if you're unable to return to the job you had before becoming disabled. After two years, you may continue to receive benefits only if you're unable to work at any job.
Why we need Of Disability Insurance?
Disability insurance can help protect you and your family from an unexpected illness or accident that leaves you unable to work and earn an income.
Generally, disability insurance replaces between 60% and 85% of your regular income, up to a maximum amount, for a specified time if you:
- temporarily can't work
- are permanently disabled due to an injury or illness
Permanent refers to the nature of the disability. It does not mean that you'll get benefits for the rest of your life.
Many employers offer disability insurance. However, you can get your own disability insurance plan through a life and health insurance agent.
If you're self-employed, you can also get disability insurance that will cover many of your business expenses if you're unable to work.
- As per statistics 22% of Canadians age 15 and above are found with one or more disabilities.
- Employment rate of disabled Canadians in the age band of 25 to 64 is 59% only.
- Possibility of getting heavily injured resulting in 90 days or more loss of employment is very high i.e. 1 out of 3.
- Assured monthly paychecks
- Family feels financially secured
- Offers diversified benefits equivalent to your regular income.
- You can get insured despite your medical history.
It is important that you access your needs and budget correctly and choose the most appropriate insurance coverage.
- Short-term Disability (STD): Insured gets 70% of regular income, covers employment gap of 15-52 weeks
- Long-term Disability (LTD): Starts after STD expires and extends benefits up to 2 years. To extend benefits you have to engage in work rehabilitation plans.
while selecting plan, keep in mind the following steps:
- Detail analysis of your current needs, possible expenses in the future, and potential of cutting back
- No. of dependents, their essential needs, and expenses
- Do not forget your down payments and saving bonds
- If you are self-employed then calculate the overhead costs of running your business
- Some insurances offer coverage till 75 years of age
