5 Disability Insurance Guidelines for Beginners

Unfortunately, not everyone is able to work and earn an adequate living on their own as a result of a disability. The Canadian government understands this and will compensate you through their social benefits, if you’re eligible. In Ontario, social benefits are available through the Canadian Pension Plan (CPP).

In addition to disability benefits, individuals can protect their livelihood through disability insurance. Disability insurance can protect you and your family from an accident or unexpected illness that leaves you unable to work and earn a sustainable income by covering a percentage of your income. Disability insurance can be complicated, if you have any questions regarding your existing coverage or getting coverage, reach out to a disability lawyer today.

Below are several facts about disability insurance that you should be aware of as a Canadian.

1. Likelihood of Becoming Disabled

This may be bleak, but bear with us as we are only trying to help! The majority of Canadians are quite good at making a financial plan for their death, but they often do not plan for the event that they become disabled. This is likely because people don’t want to think about the fact that they may fall ill or sustain a serious accident.

Despite Canadian’s lack of planning for disabilities, the chance of total or partial disability is three to five times greater than a premature death. In fact, one in seven people between the ages of 35 and 65 will become disabled for five or more years. Lastly, a healthy 35 year old has a 50% chance of becoming disabled or unable to work.

This means that the need for disability insurance is of more importance than a financial plan for death. It is important to plan for the future as a disability or illness could cause a world of financial problems. The bleak part is over, phew!

2. What Disability Insurance Will Cover

In general, disability insurance plans will cover between 60% and 85% of your regular income, up to a certain maximum. Usually your pre-tax base salary is used in the calculation, this does not include bonuses, stock options or other extra compensation. These insurance benefits will take effect if you temporarily can’t work or are permanently disabled due to an injury or illness.

Most disability insurance plans have short term and long term benefits. Typically, short term disability insurance will cover you for 6 months while you’re ill or injured. Long term disability insurance will cover you after the short term period ends.

3. Where to Get Disability Insurance

Most employers offer disability insurance to their employees. However, if you don’t have disability insurance through your employer or would like a better plan, you can contact a life or health insurance agent to get your own disability insurance plan. Be sure to do your research on insurance companies before making a final decision.

4. What Defines a Disability?

The definition of a disability will vary depending on the insurance company you use and the specific plan you have. If you want to get the details, read the fine print of your insurance plan and contact your insurance plan administrator or agent.

In Canada, back disorders are the most common reason why people cannot work. If this is you, it is very likely that the disability insurance will cover you considering the commonness of the condition.

5. What to Ask Your Disability Insurance Provider

Insurance plans can be complicated. Whether you’re getting insurance for the first time or have an existing policy, be sure to ask about what exclusions there are (if any), pre-existing condition clauses, how much the policy costs and will you be required to make premium payments while living with an illness or disability.

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