The Facts about Disability Insurance

The Facts about Disability Insurance2019-02-19T11:35:53+00:00

Why would you need Disability Insurance?

Millions of working Canadians are facing a growing crisis: a lack of adequate disability insurance coverage. Today, the absence of emergency savings, rising medical costs, and an overall trend of fewer employers offering benefits to workers has created a critical blind spot for many Canadian workers and their families. Without some kind of income protection, more Canadians are experiencing severe financial difficulty if they need to miss work due to illness, injury, or mental health issues.

What are the chances you would become Disabled throughout your working years?

Although we may think of a disability as someone who is confined to a wheel chair, but nothing could be farther than the truth. This may be one of the reasons many people do not take disability insurance seriously, as they believe the injury needs to be so traumatic, you would be required to be confined to a wheelchair or hospitalized for months on end.

But the average Canadian has a 1 in 3 chance of having a disability that lasts longer than 3 months within their working careers from age 25 to 65. That is a 33% chance something will happen which will require you to give up your paycheque for 3 months at least.

What Types of Disabilities are most prevalent amongst the Canadian Workforce?

The thoughts of being disabled, or using a wheelchair usually seems the farthest thing from most hard-working Canadians. Falling off the roof while cleaning the gutters and breaking your spine, getting into a bad car accident that you were not responsible for, a slip and fall on an icy sidewalk or staircase, getting injured while playing adult sports… There are many typical things that we do everyday, that if not careful can devastate our Family Finances.

The Most common types of disabilities are actually due to Illness and not Injury. A Stroke, Heart Attack, Cancer, Muscle and Joint Disorders and Mental Illness, top the list…

What are the Financial Consequences of a Disability, by the numbers?

When we consider disability insurance, we think about replacing our weekly or monthly paycheque, but what does that mean in real terms? Did you know 46% of Home foreclosures in a Traditional Mortgage are the result of a disability, whereas only 2% of Traditional Mortgage foreclosures are due to Death. Even if you had saved 10% of your income throughout your working years, only 1 year of a complete disability could wipe out your entire savings.

Would you be willing to dip into your retirement fund to survive? Would your bank give you more money or less if you were disabled? The disability benefit from EI is only $562 per week for a maximum of 15 weeks…

I already have Disability Insurance through my work, but

  • Have you Reviewed the Amount that is available to you?
  • Is it a Taxable or non-Taxable Benefit?
  • Is it an Own Occupation Policy or an Any Occupation Policy?
  • What is your Waiting Period?
  • Are Benefits coordinated with CPP or EI?
  • Do you have a COLA rider?
  • Does it cover Office Expenses such as Rent, Salaries, Loans, Equipment and so on…
  • Are the Rates Guaranteed until Retirement?
  • Do you receive a benefit for a Partial Disability?
  • And much more…

What would you rather do?

Disability Insurance typically costs 2% of your annual wage to properly protect your Income. If you were offered a job that paid $100,000 per year but had no income protection guarantees. Or you were offered a job that paid $98,000 per year guaranteed until retirement, no matter what happened, which job offer would you choose???

If you knew your home, which you perceive as your family’s greatest asset, was only insured for 1/3 of its replacement cost, would this worry you? If you had a $1,000,000 home, and found out that the current insurance coverage would only pay for a $300,000 replacement house if it burned down, when would you want to know about this? Now or at claim time?

How does your Income Protection Program hold up, are you protecting 100% of your Paycheque or only 33%?

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