Compare Disability Insurance
You could save thousands of dollars by comparing prices before you buy disability insurance policies
What is Disability Insurance?
Disability insurance is also called income protection insurance because that is what this insurance it is meant to do. It covers you when you are unable to work. Much like Critical Illness as well as Mortgage Insurance, it protects your income when you are disabled due to sickness or accident.
What is Disability Insurance?
What would happen if you were in an accident tomorrow morning and had to temporarily stop working? Could you meet your financial obligations? Disability insurance protects your income, and that’s valuable! It allows you to take time to get back on your feet with peace of mind while your insurance benefits pay for your house, car, and groceries. With the right disability insurance, you get a monthly payment that adequately replaces your income. Benefits are usually between 60% and 85% of your income. If you have mortgage insurance that includes disability, keep in mind that it only covers you for the payment of your mortgage while you are unable to work. The monthly income you get with disability insurance, meanwhile, covers your other financial obligations and may even allow you to continue saving for retirement.
The definition of disability
Disability refers to a mental or physical condition that prevents an individual from supporting himself or herself. Be careful, as not all insurance companies define disability in the same way. For example, your disability could be partial or total, or it could involve your regular occupation or any job. The implications are quite different depending on which definition prevails. In some cases, as soon as you are able to work at any job, you cannot be compensated. For this reason, it is essential to understand your contract.
Disability insurance for salaried employees and the self-employed
Disability insurance relieves the stress from a situation that prevents you from working and earning an income for yourself and your family. You may already be covered by group insurance at work. If you currently have coverage, it is important to check with your employer and supplement your coverage with individual disability insurance. Group insurance is often offered to all members of the same group, such as all employees of a company. You are probably obliged to subscribe to it and cannot personalize your coverage. There is nothing to stop you from purchasing an individual plan in addition to your group insurance. By combining your group insurance with an individual plan, you can choose your own coverage. A more complete coverage will protect your family from the financial impact of your disability. For self-employed workers and business owners, it is even more crucial to purchase this type of insurance. A disability that prevents you from working could have disastrous consequences on the continuation of your business
Some tips for saving money on your next disability insurance policy in Canada
Choose your type of disability insurance policy carefully
Several types of contracts are available. With those that guarantee a guaranteed premium and renewal, the cost of your insurance is fixed and the insurer cannot change the terms. If you choose a non-guaranteed premium and guaranteed renewal instead, the cost of your insurance may increase in the future. When neither the premium nor the renewal is guaranteed, both the cost and the terms may change. Pay attention to your policy: is there any mechanism, such as a cap, that controls the increase for non-guaranteed premiums? A very aggressive offer at the beginning could go up and be much less attractive than at first glance.
Extend the time between your claim and when you receive your benefits
Following an accident or illness, a doctor will confirm your disability. The period of time between that time and the time you begin receiving benefits is called the elimination period. It can be 30 days, 60 days, 90 days or even 120 days. This is the period during which you must support yourself from your personal savings. When you sign your contract, you choose the period that suits you. A shorter waiting period will result in higher premiums, and a longer waiting period will result in lower premiums. So if you have enough savings to support your lifestyle for 90 days, you’ll pay less than if you choose a 30-day waiting period.
Select a short benefit period
Disability insurance provides you with temporary income replacement. Short-term disability insurance covers up to 6 months, and then long-term insurance can take over if you are still not able to return to work. The shorter the duration you want to insure, the better your premium will be. For example, if you want to receive benefits for 2 years in case of illness, your premium will be less expensive than if you want to insure yourself for a disability that would last 5 or 10 years.
Make sure that your benefits are properly indexe
It’s important, especially if you’re young, to look at benefit indexing. Indexing refers to an automatic change in the value of a benefit based on changes in certain economic data, such as the cost of living. It’s what makes your benefits work for you 10 or 15 years from now! Indexed benefits will increase over the years and allow you to maintain your purchasing power. If not, inflation may get ahead of you and what you receive will seem lacking compared to the cost of living!
Learn more about disability insurance
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Frequently asked questions about disability insurance
What is disability insurance?
Disability insurance, often called disability income insurance, is a form of income protection for a beneficiary. This beneficiary is yourself from the moment you sign up. In the event of disability, such as when an illness or accident prevents you from performing your job duties, the beneficiary can receive benefits. In other words, it is what allows you to have the necessary money to cover your usual expenses: rent or mortgage, car payment, food, leisure, savings, etc. This insurance can pay you up to 85% of your usual income.
Is disability insurance tax deductible in Canada?
Is disability insurance worth it?
What is covered by disability insurance?
Are disability insurance payments taxable in Canada?
Can you buy short term disability insurance?
Does disability insurance cover cancer?
How does disability insurance work?
What is long term disability insurance?
Does disability insurance cover mental health?
How long does disability insurance last?
Do I need disability insurance if I already have critical illness insurance?
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