What Is Disability Insurance? Everything You Need to Know About This Critical Protection
February 09 2023
Disability insurance can be a crucial protection for workers if an illness or injury prevents them from being able to work. It provides a regular income, which can be extremely helpful in ensuring that you and your family are taken care of and not left struggling during a difficult time. But what exactly is Disability Insurance, and how does it work? Read on to learn everything you need about this essential type of coverage. From eligibility requirements to benefits and more, you will get an overview of this crucial financial protection so that you can make an informed decision regarding protecting yourself and your family. Contact us today to know more.
What is disability insurance?
Nearly one in four of today’s 20-year-olds will become disabled before they retire. In fact, only 48% of Canadians have disability coverage offered by their workplace compared to 57% in 2015. Among Canadians without disability coverage, 84% have not bought coverage themselves, which leaves them exposed to great financial risk if they were ever unable to work due to a disability.
Insurance provides income replacement if you can’t work because you have a medical condition that prevents you from performing your regular occupation's material and substantial duties. In other words, it helps financially protect you if an injury or illness keeps you from working.
How does disability insurance work?
There are two types of disability insurance: short-term and long-term. Short-term disability insurance pays a percentage of your salary for a set period, typically three to six months. Long-term disability insurance pays a portion of your salary for an extended period, often until you reach retirement age.
Most employer-sponsored disability insurance plans are short-term and typically cover up to 60% of your salary. These plans are designed to replace a portion of your income if you cannot work due to illness or injury. Some employers offer long-term disability insurance as well, which can provide coverage for up to 70% of your salary.
If you're self-employed or work for a small business that doesn't offer disability insurance, you can purchase an individual policy. Individual policies are typically more expensive than employer-sponsored plans but provide more comprehensive coverage. Many personal policies will cover up to 80% of your salary; some will even pay benefits until you retire.
When shopping for disability insurance, it's essential to consider the benefit amount, the length of the benefit period, the elimination period (the amount of time you have to wait before benefits begin), and any exclusions or limitations. It's also essential to ensure that a reputable insurer backs the policy with an excellent financial rating.
Who needs disability insurance?
Many people may need disability insurance but don't realize it. If you are the primary breadwinner for your family and have a mortgage, or other significant financial obligations, disability insurance can help protect you and your family if you cannot work.
If you're a business owner, disability insurance can help keep your business afloat if you cannot work. It can also help protect your employees if they become disabled and cannot work. Even if you're young and healthy, disability insurance is worth considering.
How much does disability insurance cost?
The cost of disability insurance varies depending on several factors, including the insurer, the policyholder’s age and occupation, and the amount of coverage.
Of course, the best way to get an accurate estimate of what your policy might cost is to speak with our insurance agent or broker in GTA. They will be able to take into account your unique circumstances and find the coverage that best fits your needs – at the best possible price.
We can help!
Like most people, you probably don't think about disability insurance very often. But if you become disabled and cannot work, disability insurance can be a critical financial lifeline.
Inslyf Brokerage specializes in helping people find the right disability insurance policy for their needs. We'll work with you to assess your risk of becoming disabled and help you choose a policy that will provide the financial protection you need.