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Personal Wealth and Finance


What is Disability Insurance?

August 1, 2021

Disability Insurance provides a monthly income if you are incapacitated and incapable of working due to an injury or illness. Often called “Income Replacement Insurance”, this coverage is important for self-employed individuals and those without disability insurance via their employer.

The risks of income loss Your ability to earn income may be compromised through injury or illness if you become disabled. Your ability to pay bills or save for retirement could decline. Disability insurance plans are designed to help you meet necessary income requirements enabling you to concentrate on recovering from your disability and returning to an active income-generating life.

Who can be covered? Income protection can provide peace of mind for professionals such as lawyers or doctors, small business owners like plumbers or carpenters, leading business executives, as well as full- or part-time or home-based workers. You can also supplement the disability coverage you have with an employer or an association such as the Canadian Association of Retired Persons (CARP).

How do you collect disability benefits? Generally, disability benefits are received if you can’t perform the duties of your own occupation, a similar job in your field, or any job at all. How soon and for how long you can collect benefits is determined in your policy contract.

Disability insurance benefits are payable every month during a disability for the benefit period of the contract, which can vary. The policy continues when you recover from a disability, usually payable again for a subsequent or recurring disability.

I’m healthy: why should I be covered? Most people are aware of the importance of life insurance but rarely think about having a disability despite the statistics indicating they are quite common. Death is inevitable, while disability is probable at any given age.

If you are running a business (or work as an employee), you should be covered by some form of disability insurance (income replacement insurance). Such planning is the only way to avoid the financial and emotional stresses resulting from long-term disability. Develop your backup plan today!

 

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