Disability Insurance

All You Need to Know About Disability Insurance

Disability is a physical or mental condition that restricts our ability to perform day to day operations normally. In case you suffer any temporary or permanent disability because of some accident or medical issue then your normal health insurance will not provide sufficient coverage. It can help you up to some extent like hospital bills, treatment or medication but only a limited amount. If you need to take a long leave or permanently off from your work because of disability then you need to have a stronger financial back-up.

Disability insurance, also known as DI or disability income insurance, provides you coverage for the loss of income you earn from your job or business if you suffer any type of disability and need to take time off for recovery or permanently. A disability can be defined as psychological disorder, physical impairment or injury that hampers your working capabilities. The policy covers paid sick leaves, short-term or long-term benefits for disability.

Need for Disability Insurance

  • The compensation received acts as your alternate income till the time you are not fit to go back to work.
  • If your family is dependent on you financially, you must go for disability insurance.
  • If you are engaged in a risky or accident-prone work profile or work in a hazardous work environment then disability insurance is a must.

In Canada, disability insurance can be purchased individually or some employers purchase it for their employees as a group insurance policy. Drawback of the policy given by the employer is that it covers you only during working hours and is valid till you work for that employer. You can always go for disability insurance personally. Other than that Canadian government provides the Workers’ Compensation and Benefits plan under which disability benefits are given but if you meet specific criteria.

Perks of Disability Insurance

  • Choose coverage depending upon your need.
  • Every month you receive a fixed amount till you are fit to go back to your job or business. 
  • In case you are not able to go back to work then compensation is given till you reach 65 years of age. 
  • You get monthly compensation equivalent to minimum 65% or as much as 80% of annual gross income. 
  • Medical history will not impact approval of the policy. 
  • The cost of rehabilitation or retraining support programs that help you get back to work is also covered by the policy. 

The coverage and cost of the policy will depend upon the type of plan you go for. The options available offering different coverage are: 

  1. Short-Term Disability Insurance Plan: Offer coverage for 15 weeks to maximum 52 weeks. Monthly installment is equivalent to 70% of your gross income. 
  2. Long-Term Disability Insurance: Comes into effect as soon as paid leaves or short-term benefit is completed. Coverage is maximum for next 2 years and to extend coverage till age of 65, it is necessary to get engaged in rehabilitation programs.