What is Disability Insurance

Disability insurance is designed to replace a portion of your income if you become disabled and are unable to earn an income. A disability can result from a number of causes, including an injury, a serious illness or a mental health issue.  And the duration of a disability can be either short- or long-term.

There are different kinds of disability insurance coverage, including individual insurance plans and group insurance plans, as well as government plans such as workers’ compensation and benefits provided under the Canada Pension Plan.

Benefits

Replacement income if you become ill or are injured.

Depending on your occupation, the more dangerous your job the higher the premiums and limitations.

The amount of coverage usually can’t be more than 2/3 of your current earnings.

The paid benefits from an insurance claim are tax free.

Benefit period can vary, anywhere from 2 years, up until the age of 65.

After 65 coverage may continue, although the insured must continue to work. Coverage may be modified.

Short Term vs Long Term Disability Insurance

Short term DI (otherwise known as weekly indemnity) provides income for the early part of a disability. A common length of time for short-term DI is two weeks up until 150 days.

Long term DI replaces lost income for an extended period, and goes into effect after the short term DI has ended. It often ends after five years, or when the covered person turns 65, depending on the policy.

Next Step

 Your decision should be made with the help of someone who really understands the product.