Compare Disability Insurance

You could save thousands of dollars by comparing prices before you buy disability insurance policies

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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!

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?

It all depends on how carefully you select your insurance policy… and what fate has in store for you. No one likes to think about the bad things that could happen to them. However, about 14% of Canadians report an inability to work. By examining the type of policy chosen, the expected duration of benefits, the waiting period and the indexation of the benefits, you will be able to determine if it meets your needs without being overpriced Don’t hesitate to ask questions to insurance companies before signing with them. A good insurer or broker should be able to advise you of the most beneficial option for your situation.

What is covered by disability insurance?

Only your contract will give you a firm answer to this question. In general, disability refers to the inability to work. Its definition varies from one insurer to another. Exclusions are very often written in the policy. For example, if you have a pre-existing condition, you might not be covered for that specific condition, or you may have to pay an additional premium. In addition, if you have different types of insurance, the benefits will be adjusted according to your situation as not to duplicate each other. Your insurer may limit the amount they will pay you based on what you already received from another plan. When you make your claim following an event, your broker or an insurance company agent will be able to explain what type of benefits you will receive. Once your claim is approved, you can use the money paid to cover any expenses of choice: daily expenses, bills related to your care, or mortgage payments.

Are disability insurance payments taxable in Canada?

You may have to pay tax on the benefits you receive from your insurer. This depends on your situation. If your premium, or part of your premium, was paid by your employer, union or association, you will pay taxes on the money received during your disability. If you have any doubts, your employer should be able to confirm how premiums are paid. On the other hand, if you have an individual policy and you have paid all your premiums yourself, you do not have to pay taxes on the money received during your period of disability.

Can you buy short term disability insurance?

Yes, there are different ways to do it. Short-term disability insurance is often included in the insurance plan offered at work. This type of short-term insurance provides benefits for up to 6 months in the event of illness or injury. You can get short-term disability insurance from your employer or purchase it individually. Short-term disability insurance comes into effect before long-term disability insurance. It is valid for a specific period that is calculated in weeks. If you do not have a short-term disability plan and your employer does not offer one, you may also be eligible for EI sickness benefits.

Does disability insurance cover cancer?

No matter the reason, if you are unable to work, disability insurance comes into play. Contrary to what one might think, it is not your doctor who decides whether your disability is covered by your insurance or not; rather, it is the insurance company. It relies on your situation and your contract to determine whether or not to accept your claim. However, there are also specific insurances for cancers. These can cover the amounts needed to cover hospitalization costs, short and long-term care, medications, etc. These coverages are not part of disability insurance and must be purchased through another insurance policy. While disability insurance helps cover the loss of income for working-age people, other insurance, such as long-term care insurance and critical illness insurance, cover health care expenses directly.

How does disability insurance work?

When a doctor confirms your disability, you can file a claim with your insurance company. They will review your file to decide if they accept your claim. If so, you will then receive a monthly payment to replace a fixed percentage of your income. During the waiting period, which is the period between the time of your application and the time the company makes its decision, you will not receive a benefit. This period is specified in the contract and varies according to your choice at the time of signing. Regardless of whether or not you have disability insurance, you may be eligible for benefits under government plans. If your disability was caused by a work-related accident, you may receive compensation from your provincial Workers’ Compensation Board. These might also be called Worksafe or or Workplace Safety and Insurance Boards (WSIB). If you are permanently disabled, you might be able to qualify for Canada Pension Plan (CPP) benefits provided you have already contributed to it. This will not prevent you from receiving your insurance benefits, but your insurer could coordinate these plans and therefore reduce the amounts it pays you. Another important consideration is whether your premiums will be waived during your disability. Check to see if your insurance plan says you won’t have to continue paying your premiums while you’re disabled.

What is long term disability insurance?

Yes, you can buy disability insurance even if you have a pre-existing medical condition. However, you should expect to pay higher premiums. Some insurers may also deny your application, depending on the severity of your condition.

Does disability insurance cover mental health?

Mental health is not always included in disability insurance coverage. There are several types of exclusions to the insurance contract that justify a refusal to compensate you. General exclusions are present in most disability insurance policies and regularly target intentional acts of the insured (misdemeanors, felonies, etc.), as well as suicide, depression and the consequences of acts of war (sabotage, riots, etc.). Special exclusions may also be added to your contract, particularly, if you practice a dangerous sport or a risky profession if you have a known medical history before signing, back problems, professional overwork, etc. In short, certain mental illnesses may be excluded from your coverage. If this is a concern for you, ask questions and read your policy carefully

How long does disability insurance last?

It all depends on your policy! Short-term disability insurance can be paid for a maximum of 6 months. As for long-term disability insurance, the benefit payment period will be extended depending on the agreement. Do you have insurance for 5 years of disability or 10 years? In some cases, benefits can be paid until you turn 65.

Do I need disability insurance if I already have critical illness insurance?

A disability can be caused by an accident or any other event that is not a critical illness. The two types of insurance do not overlap that much. You may still need disability benefits without it being due to a critical illness. Disability insurance replaces your income, while critical illness insurance may, for example, pay for drugs that are not covered by government plans. Critical illness insurance specifically protects you against the consequences of cancer, infectious disease and heart disease, among others.

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