Disability insurance helps protect you and your family from an unexpected illness or accident. If you’re unable to work and earn an income, disability insurance can replace between 60% and 85% of your income. You receive a benefit if you’re ever diagnosed with a covered medical illness, mental health issue, or injury that prevents you from working.
What is Disability Insurance?
Protect your paycheque! Disability insurance works when you can’t. It gives you tax-free income to help pay expenses if an illness or accident stops you from working. Self-employed individuals have financial responsibilities far beyond themselves and good planning can save a business. Up to 85 percent of your regular income is typically replaced by disability insurance. Most claims involve fractures, sprains, depression, anxiety, and cancer. The average disability period is nearly 3 years, and many Canadians would have to sell their home within 6 months. The longer the waiting period, the lower the premiums.
- Benefit periods: 25, 60, 120 month and to age 65
- Monthly benefits: up to $25,000
- Waiting periods: 30, 60, 90, 120, 180, 365 & 730-Day
- Cost of Living Rider
- Own Occupation Rider
- Return-of-Premium (50%) Rider
How Much Does Disability Insurance Cost?
Generally speaking, disability insurance should cost you approximately 2% of your annual income. A salary of $75,000, expect to pay a premium of $1,500 yearly. This can be significantly higher if the return-of-premium rider and/or others are added to a basic policy. Price is based on numerous factors such as:
- Age
- Benefit Period
- Coverage Amount
- Health
- Occupation
- Waiting Period
Is Disability Insurance Worth it in Canada?
Keep in mind that government plans may come with certain limitations and may not offer enough protection. Up to 40% of Canadians become disabled for 90 days or longer before age 65. It can replace most of your paycheque. Aside from protecting you from lost income, disability insurance can also help cover the cost of living.
Who Needs Disability Insurance the Most?
- The Sole Provider of the Family
- People in Physically Demanding Roles
- People Who Support Minors
- People With Recurring Injuries or Illnesses
How Does Disability Insurance Work?
- Choose the amount you want and add optional benefits to customize your coverage
- Pay your monthly premium
- File a claim if you become disabled
- Receive your monthly payments when the waiting period ends
- Your payments stop when your benefit period ends or you return to work
How Much Income Can You Receive?
| Annual Income | Maximum Monthly Benefit |
|---|---|
| $35,000 | $2,200 |
| $50,000 | $2,975 |
| $100,000 | $5,200 |
| $120,000 | $5,925 |
| $140,000 | $6,625 |
| $200,000 | $8,550 |
| $300,000 | $11,350 |
| $500,000 | $16,050 |
| $1,000,000 | $25,000 |
