Why purchase disability insurance?

A person is considered disabled when they cannot work or earn
Caroline Arbour | Journalist

Almost a third of all Canadians experience at least one 90-day disability before age 65*. Since there are so many insurance products out there, here are some facts that can help you make an informed decision.

What is a disability?
A person is considered disabled when they cannot work or earn income.

A disability is unexpected and can occur suddenly after a car accident, sports injury or heart attack. You can also become disabled due to chronic or degenerative diseases like cancer, depression and multiple sclerosis.

Your disability stops you from working. You may lose your regular income but you will still have pay monthly bills to pay and medical bills can pile up too for things like specialized care and equipment.

What is disability insurance?
Also called income insurance, disability insurance pays benefits to people who become disabled. 

It replaces a portion of your regular income, usually between 60% to 85%, for a specified time. The benefits help you maintain a certain standard of living and prepare for the financial impact that illness or injury can bring.

Group coverage: for employees and members of an association
This coverage is for employees of the same company or members of an association. The employer and the employee generally share premiums. 
- Coverage ceases as soon as the employee leaves or loses his job.
- Insurance benefits are taxable
- Many smaller companies do not offer this type of coverage. It is important to ask your employer, union or association for details concerning your coverage.  
Individual disability insurance: for self-employed workers and entrepreneurs
These plans are often available to self-employed workers and entrepreneurs, who do not have a safety net in case of disability, and to employees who want personal coverage.

- Coverage remains in effect even if you change your job or withdraw from an association
- Benefits are not taxable
- Plans are personalized to best meet your needs 
Why apply now?
Not everyone is eligible for disability insurance. The cost of the policy and approval of coverage depends on several factors and associated risks such as age, state of health and type of employment. If you are young and healthy and hold a steady job, you have better chances of getting coverage and your premiums will be lower.

To learn more, make an appointment with a financial security advisor or go to l'Agence de la consommation en matière financière du Canada or the Guide to Disability published by the CLHIA Association canadienne des compagnies d'assurances de personnes.

* Data from the Canadian Life and Health Insurance Association.

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