The peace of mind from income protection is available for
professionals, business owners, business executives, and full-time,
part-time or home-based workers. Whether you need to secure
your main source of income or to supplement the coverage you
receive from your employer or an association, we can help
by providing you with a comprehensive and portable plan you
can rely on throughout your working years.
There are two major types of disability coverage:
Short term disability (sometimes referred
to as Weekly Indemnity)provides an income for the early part
of a disability. A policy may pay benefits for two weeks up
to two years. Short term disability is often included as part
of an employee benefits package.
Long term disability helps replace income for an
extended period of time, usually ending after five years or
when the disabled person turns 65. Some people have long term
disability insurance provided by their employers; others purchase
Income Replacement: Your disability plan
pays you a regular income each month during your disability.
Your basic coverage and premiums are linked to your occupation,
income and other sources of insurance.
Non-Cancellable: This means that once the
policy is issued, and premiums are up-to-date, the amount
of your coverage and premiums are guaranteed for the life
of your policy.
Flexible Terms: Depending on your needs and
occupation, you can purchase insurance that covers you for
one, two or five years, or until you turn 65.
When Are You Considered Disabled?
The definition of disability can vary depending on the policy
you have. For example, some plans pay when you are unable
to engage in your own occupation while others pay when you
are unable to engage in any occupation for which you are reasonably
suited based on your training or experience.
It's common to use an own-occupation definition for two years,
three years or even longer, with an any-occupation definition
thereafter. Many disability plans require that you not be
gainfully employed while you are collecting benefits.
Some policies will pay you a portion of your monthly benefit
if you have lost a part of your income due to a disability.
This is usually referred to as a residual or loss of earnings
Some policies include a rehabilitation benefit that pays
some or all of the cost of a course of occupational rehabilitation
approved by the insurer.
Keep in mind that many policies will not cover disabilities
caused by suicide attempts, drug abuse, war, or attempts to
commit a crime. Pre-existing conditions are also frequently
Benefits Start Date
Long term disability plans have a waiting period before benefits
begin accumulating. The most common waiting period is 90 days.
However, you usually can get as low as a 60-day waiting period,
as well as 180-, 365- and 730-day waiting periods.
How Long Will Benefits Be Paid?
In most disability income plans, you can elect the maximum
time your benefits will be paid. The most frequently offered
benefit periods are two years, five years and to age 65.
You normally should plan on replacing at least 60% of your
net after-tax pay and preferably 80% if you can afford the
additional coverage. Small business owners have special concerns
and should consider talking to an expert about overhead expense
policies and other special considerations.
To correctly determine the actual amount of coverage you
would need if you became disabled, ask yourself how much monthly
income would cover your living expenses. Would these expenses
go up or down if you became disabled?
These expenses must be carefully considered. Work-related
expenses will go down. Medical expenses may increase. Education
expenses may increase as you retrain. Some insurance policies
may have premium waivers
Outside disability insurance, what are your alternatives?
The following may help you cope financially through a time
of disability. However, they may not be enough to allow you
to return to a full and active life with your financial security
Spouse's Income - if you have a spouse, you may be able to
rely on that income
- Worker's Compensation - only for industries that are covered
and disabilities that are work-related
- Employer, Union or Association Plans - often group plans which
provide short-term and/or long-term disability protection
- EI Benefits - pays a 15-week benefit if you can't work due
to an illness or an accident, provided you've contributed
for a specified number of weeks within the past year
- Canada and Quebec Pension Plans (CPP/QPP) - you might qualify
for limited disability benefits under these plans
- Savings & Assets - you can sell personal property or use
your savings to pay bills