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Very knowledgeable and helpful in determining the best plans for my son and I and he took the stress out of the process. Fully explained all of the options available to me, and answered all of my questions. I know that I made an informed decision ...
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First I was skeptical about high reviews but anyways PolicyAdvisor. I could see that they are trying to give best details they have and guide us to choose policy rather than selling it. Rarely I type in reviews. I can say that PolicyAdvisor is wor...
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Thank you for the excellent customer service. You’ve been very supportive in all our questions. After the video call, he didn’t really push to sell. We appreciate your time, and support in giving us updates and follow-ups and phone calls until we ...
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Answer all our questions in a timely manner, and the process was much more simple than I was expecting. We had our life insurance sorted and approved within a few days. I really like that they did the comparisons of policies for us.
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Was looking for a life insurance policy and the search was exhausting by conventional means, until I found PolicyAdvisor. My representative was excellent, and explained all my options and preferred quotes. Life Insurance made easy, thank you all a...
Pedro
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Zeny D
A walk in the park
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Mayank
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Lindsay
What is disability insurance?
Disability insurance provides a monthly benefit (in the form of a cash payment) to partly replace income you lose while you are recovering from an illness or injury. This payment helps minimize the financial and emotional impact of not receiving your paycheque.
How does disability insurance work in Canada?
Disability insurance offers you protection against loss of income by replacing a substantial portion of your paycheque if you become disabled.
The insurance company typically agrees to replace 60 to 85 percent of your regular income, regardless of whether the loss of your earning ability was due to a sudden accident or a degenerative illness.
This ‘benefit’ payment is made to you until you return to good health (i.e. resume working) or until the end of your disability coverage period – whichever comes earlier. The amount of the monthly benefit depends on the amount of coverage you take and other factors like the waiting period and occupation definition you choose.
Some assume they have full disability coverage through their work disability insurance (known as group disability insurance) or another policy they may have like critical illness insurance. Unfortunately, this is not typically the case. While it’s possible you have limited coverage through your work, individual disability insurance coverage often goes beyond the protection limitations of other forms of coverage you may already have.
Group disability insurance is purchased by your employer who offers it to you, the employee. Because the employer has purchased this policy, essentially in bulk for the company, they might receive a discounted rate compared to the cost of individually insuring each employee. However, as a result, coverage is limited. The employers get to pick the coverage for you and they may also change it from year to year. With an individual policy, you get to decide what coverages you need and how much you pay for it.
Should I get Disability Insurance?
Absolutely, one should get disability insurance and protect their livelihood.
Disability coverage is a must-have for:
- Those who depend on regular income to pay for rent or mortgage costs
- Those who need a paycheque to support family or other regular living expenses
- Those with limited access to savings to maintain their current lifestyle for an extended amount of time
Serious illness, debilitating injuries, mental health, and other issues which require lengthy hospital stays are common in Canada. Around 1 in 7 Canadians have a disability. Additionally, 33% of workers between ages 30-64 will experience a disability for longer than 90 days. While health care covers the cost of treatment, it does not cover lost wages from missing work.
If you are one of the majority of Canadians that depends on your ability to earn a paycheque to maintain your quality of life, a disability insurance policy is worth it. You can use the proceeds in several ways while you recover:
- Income replacement
- Ongoing expenses
- Doctor consultation
- Rehabilitation
Need insurance answers now?
Call 1-888-601-9980 to speak to our licensed advisors right away, or book some time with them.
Do I need supplemental disability insurance?
There are some clear factors you can consider when deciding whether you need to purchase supplemental disability insurance. With a supplemental (or independent) disability insurance policy, you own your coverage. This is the opposite of a group plan, where the policy administrator (such as your employer) owns the policy and controls its details.
With supplemental disability insurance, you can seek the maximum coverage amount your individual circumstances allow and add additional top-ups to make it the perfect policy for you.
The coverage is portable: it goes wherever you go, regardless of whether you change employers or make new friends with new group memberships. Your cost of insurance will not change unless you increase the coverage amount.
With so much depending on your earning ability, group disability plans may not be enough. Instead, consider supplemental disability coverage.
Can I buy disability insurance on my own?
Yes, you can apply for your own disability insurance policy, which you own outright and does not belong to your employer (workplace benefits) or your association or group (a collection of professionals like doctors, dentists, etc).
Does term life insurance cover disability?
No, term life insurance does not cover lost income due to disability in Canada.
However, if you are contemplating getting term life insurance soon, you may have the ability to add a disability insurance rider to your policy as an optional benefit.
Many insurance providers have coverage options for disability or critical illness riders that can supplement your income should you fall ill.
Your best bet is to speak to one of our licensed insurance advisors to see what coverage is best for your situation.
Is disability insurance taxable?
The answer is … maybe. Disability income may or may not be subject to income tax depending on whether the policy premium was funded with pre-tax or after-tax dollars.
If you are paid out by a policy that was fully or partly paid by your employer or group association, you will be taxed when you receive the monthly payment.
However, for disability plans you pay entirely on your own you do not pay taxes on your payout. If you are paying the full price for premiums throughout your coverage period, and do not claim them as tax-deductible business expenses, you will not be taxed on the payout during the benefit periods upon filing a claim.
Short term disability insurance Vs. Long term disability insurance
The major difference between short term disability insurance and long term disability insurance can usually be narrowed down to the length and severity of an injury or illness. Short term disability insurance is generally part of one’s workplace benefits and provides a weekly sum of cash while you’re recovering.
Long-term disability insurance is meant to replace or augment a portion of your income should you become injured or ill and it affects your ability to work for an extended period of time.
| Short Term Disability Insurance |
VS |
Long Term Disability Insurance |
|---|---|---|
| Limited time coverage, usually for 6 to 26 weeks | Common coverage terms are 2 years, 5 years, or longer period of time up to age 65 | |
| Usually offered through employers | Generally purchased individually, to supplement employer coverage | |
| Provides weekly income replacement | Provides monthly benefit for income replacement | |
| Benefits can begin 1-14 days after disability | Benefits begin after short-term disability waiting period is over | |
| Typically claimed for temporary health issues such as sports injuries, back problems, infections, soft tissue injury, etc. | Typically claimed for a mental health issue, musculoskeletal issue, accidental injury, physical disability, etc. |
Who offers the best disability insurance in Canada?
PolicyAdvisor helps Canadians find the best disability insurance policy for their income protection needs. But let’s be frank. There is no best disability insurance company. There is – however – the best company for YOU.
Canada is home to many established insurance companies that offer short and long term policies. For example, Manulife, RBC Disability Insurance, Canada Life, Desjardins, and Industrial Alliance (iA) are some industry leaders that we work with to set up disability insurance.
At PolicyAdvisor, we work with the best disability insurance companies. We have compiled extensive research to provide you with the best quotes. We vouch for any disability insurance company we represent and you come across using our online tools. We are happy to speak with you regarding your disability insurance advice needs.
What is the definition of disability?
There are three different kinds of disability coverage one can purchase. Own, Regular, and Any.
- Own-Occupation: A policy with an own-occupation definition protects your ability to work in your specific profession. There are no restrictions: for instance, you can continue to receive benefit payments even if you’re able to work in another occupation or in any other capacity.
- Regular-Occupation: A policy with a “Regular Occupation” definition also protects your ability to work in your pre-injury occupation or one fitting your experience and level of education. If you choose to work in a different occupation, your benefits will be reduced, or fully withdrawn.
- Any-Occupation: This is the most stringent definition of disability that can be covered in a disability insurance policy. Under this type of policy, you may be ineligible to receive benefits if you can work in any other job.
Frequently asked questions
