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The Best Disability Insurance in Canada – Updated 2023
Short-term disability may be offered by your employer, but what about long-term? We researched the best disability insurance in Canada so you can pick the best policy for you! Learn what disability insurance is, which companies offer long-term coverage, and why one should choose one company’s coverage over another.
Most people don’t consider their options when looking at disability insurance—whatever their employer is offering at the time seems good enough. But employer disability coverage options may have severe shortcomings. Therefore many would choose their own individual disability insurance plans from some of the disability insurers in the country.
Crowning the “best” disability insurer depends on your needs, your existing coverage availability, your budget, and the optional benefits available under the plan. This review provides Canadians with an informed checklist of what to look for when choosing their disability illness insurance provider, especially in regard to their long-term options and who does it best. PolicyAdvisor.com lets you shop around and stringently compare insurance rates to make sure your income is protected!
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What is disability insurance?
Disability insurance is a product that offers you protection against loss of income by replacing a substantial portion of your paycheque if you become unable to work due to a health issue. The insurance company that offers you the coverage typically agrees to replace 50 to 100 percent of your regular income, regardless of whether the trigger is 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 of course! The monthly or weekly benefit payment is potentially tax-free, depending on how you get coverage.
Why should I get extra disability insurance?
Many people who work full time will be offered disability insurance as a part of their benefits package with their employer. With most disability benefit packages, an employer may offer short-term disability that covers 70-100% of the lost income and perhaps some long-term disability coverage as well that may cover 50-70%. However, because of the convenience of easy signup paperwork, most don’t look into the details of the employer policy until they cannot work and badly need the coverage to pay for their expenses—many times they find their group coverage falls short.
With group and employer policies, plan sponsors purchase access to coverage in bulk, getting them a discount from the insurance company. Because, in most cases, the employer pays the majority of the premiums for these policies, they decide the coverage options for you. You cannot choose coverage length, percentage of income covered, or most importantly the definition of disability. It’s like when your work offers you a no-name brand pop in the lunchroom—sure it’s cheap from the vending machine, or sometimes free, but it may not be the kind you want or need. You might prefer to shop around yourself and pay for a product you actually want.
In contrast, with an individual plan, you call the shots. You can shop around and decide the length of coverage, the waiting period, and the company that works best for your needs—you get to pick your flavour of pop. You have the option to buy individual coverage to supplement your work benefits or decline your work’s plan and buy a separate private policy, just for you. However, it is usually cheaper to tailor a plan individual to you in the case of long-term disability.
Individually purchased disability insurance is also important for the growing number of self-employed workers. If you’re self-employed, you probably already know the responsibilities and stresses that come with protecting your income. Adding disability insurance to your business protection plan is a great way to ensure your family can continue to thrive. Disability insurance can provide that protection and more! Self-employed individuals may also qualify for Business Operating Expense (BOE) insurance. This covers any overhead expenses required until you can return to work.
At PolicyAdvisor, we can review your group or employer-offered disability insurance plan to make sure your policy details meet all your needs and can make recommendations for individual coverage with some of Canada’s best disability insurance companies.
The best disability insurance companies in Canada
While in most cases, your group benefits make the cut for short-term disability, but there are better options out there for long-term disability. We work with the best disability insurance providers in Canada and can find a plan that works for you! But, not all companies are the same. Some are great on price and others offer an array of extra benefits. Our expert advisors at PolicyAdvisor have ranked the insurance companies we work with and reviewed their offerings to make sure you get the best disability coverage!
The 6 best disability insurance companies in 2023 are:
- Best for comprehensive riders: Canada Life
- Best for top-up coverage: Desjardins
- Best for simplified underwriting: Edge Benefits
- Best for non-medical plans: Humania
- Best for long-term care conversion: Manulife
- Best for professionals: RBC
AM BEST RATING
A+
POLICYADVISOR RATING
Best Disability Insurance For Comprehensive Riders
Canada Life Disability Insurance Review
Do you like build-your-own products? Canada Life gets our top rating for disability insurance. Through the numerous available riders, you can customize your policy so that it’s on par or better than RBC’s offerings, depending on your needs. Additionally, they offer competitive pricing for those with less specialized occupations (like office workers with desk jobs or some minor manual task).
Read the full review of Canda Life term life insurance and other products.
Pros
- Own occupation available for 3A and 4A category job class
- Multiple rider options are available (including Accidental Death & Dismemberment and catch up rider option)
- Discounts for healthcare workers
Cons
- Slightly more expensive for professional job categories (4A)
- Limited future income option amount and COLA rider benefit amount
AM BEST RATING
N/A
POLICYADVISOR RATING
Best Disability Insurance For Top Up Coverage
Desjardins Disability Insurance Review
You know the saying “you get what you pay for”? This is the case with Desjardins. It’s cheap off the hop and has some unique built-in features, but in the long run, it may not be the most comprehensive coverage compared to other offers on the market. You pay a low premium for coverage, but what you’ll actually get for your benefit payment is determined at the time of your claim.
Read the full review of Desjardins term life insurance and other products.
Pros
- The initial premium is lower than the market share
- No waiting period built-in to policy pricing
- Death benefit related to disability payout 5x monthly amount built into policy pricing
- Guarantees the first $1,200 for the first 36 months to be non-integrated/coordinated
Cons
- Many limitations and exclusions in contract compared to other insurance companies
- Offers a guaranteed renewable product, meaning premiums may change over time
- Coordination of benefits clause after 36 months or over $1200 may decrease your payout from Desjardins
AM BEST RATING
N/A
POLICYADVISOR RATING
Best Disability Insurance For Simplified Underwriting
Edge Benefits Disability Illness Insurance Review
While not the most comprehensive coverage, Edge Benefits gets the edge for simplified underwriting—they can skip a few of your personal details in the application process in exchange for the “extras” that other companies provide.
Pros
- Can purchase their product as short term disability due to 0-day waiting period option
- Accident medical treatment benefit ($10,000)
- Simple underwriting process
- Coverage up to age 70
Cons
- Coverage may be denied for illness history (but injury coverage is guaranteed)
- Coverage limited to $5000 for 2A and 3A, $6000 for 4A
- No options for comprehensive coverage
AM BEST RATING
—
POLICY ADVISOR RATING
Best Disability Insurance For No-Medical Plans
Humania Disability Insurance Insurance Review
When we think of benefits packages, it’s usually reserved for those who have full-time, 9-5, working-for-the-man-in-a-suit-and-tie kind of job. With Humania, they’re defying that expectation. They offer coverage, albeit minimal, for seasonal, part-time, self-employed, and other income earners. But we like them best because they offer the best no-medical plans for those who don’t fit the traditional underwriting guidelines of disability insurance.
Read the full review of Humania term life Insurance and other products.
Pros
- Guaranteed products with no medical options
- Options to combine with life insurance and critical illness coverage for guaranteed products
- While limited (capped at $1000) there is coverage for seasonal and part-time workers which is not offered by other insurance companies
Cons
- Guaranteed products only offer Term 10 or 20 plan only (no options up to 65)
- Benefits capped at $6000 per month
- Guaranteed premium for the first 5 years only
AM BEST RATING
A+
POLICY ADVISOR RATING
Best Disability Insurance for Long-Term Care
Manulife Disability Insurance Review
Imagine: you’ve been in an accident. You can’t work until you heal and even if you do, you may need continual care and won’t be able to work your job. With options to convert their disability products to long-term care, Manulife has your back. They offer coverage tailored for professionals, executives, new student grads and have add-on options to cover you when you can’t work in your specialized field, but all the extras will cost you.
Read the full review of Manulife term life insurance and other products.
Pros
- Discounts for recent grads for a variety of studies
- Premium refund rider available (every 8 years if you make few or no claims)
- Future income option (FIO) riders are available
Cons
- Expensive compared to other products on the market
- Usually long application processing times
AM BEST RATING
A
POLICY ADVISOR RATING
Best Disability Insurance For Professionals
RBC Disability Insurance Insurance Review
As Canada’s biggest bank, RBC is the big dog with the best coverage. They offer a variety of packages depending on the applicant’s occupation including those who run small businesses, who are self-employed, farmers, and those operating under a fee-per-service business. When we talk about disability, we’ll likely name RBC first because they have our top rating.
Read the full review of RBC term life insurance and other products.
Pros
- Offers a bundle of basic disability insurance riders at base price
- Superior benefit amount for cost of living (COLA) benefit rider
- Future income option (FIO) rider has high benefit limits
- Family compassionate care
Cons
- Own occupation rider only available to limited occupations
- Can be more expensive for lower occupation classes
- Does not have premium refund rider
Things to look out for when applying for disability insurance
Beyond the price, there are technical aspects of a disability insurance policy that you should look out for when selecting your policy. When you’re weighing your options, you should look at:
- The policy’s definition of “disability”
Disability insurance providers classify disability in three categories: own, regular, and any.- Own occupation says you will get paid out if you can’t work your specific or specialized occupation (like a lawyer or surgeon).
- Regular occupation says you will get paid out if you can’t work in any jobs in a similar status/field as your current job, however, if you choose to work in another occupation you will lose your benefits.
- Any occupation is the most stringent. It says that if you can work any job, you won’t get benefits. For example, if your disability prevents you from working in the warehouse, but you still have the ability to work as a grocery store greeter, you won’t get coverage. Policies with “any” occupation will be cheap in premium, but won’t provide you much coverage.
- The waiting period
Each policy will determine a waiting period before you will receive your benefits. The longer the waiting period, the cheaper the policy, because usually injuries and illnesses can resolve themselves during that period. However, you will have to cover all your expenses during that waiting period—rendering the policy useless if you recover within the waiting period time.
- Amount of coverage
While most employer benefits come with short-term disability insurance that covers most of your income (usually 70-100% of your income), you may be shocked to find that the offered long-term coverage only covers 50-70%. If you can afford to supplement that 50-70% of your income for the long term with your savings accounts, no worries. But the reality is, most cannot. You may consider an individual policy with one of the providers mentioned above that may be able to offer a higher portion of your income coverage long term.
How to apply for disability insurance
The underwriting process, similar to when you apply for the best life insurance, evaluates whether you are insurable. Insurance companies will pay particular attention to whether you have any preexisting conditions that could later prevent you from working. There is also an extra step to verify your income level and work credentials since your coverage amount is generally established based on your current income. In some cases, companies may also benchmark coverage off the average income levels from previous years.
To get a quote and the application process started for a disability insurance policy that’s perfect for your needs, set up a call with one of our expert advisors today! We can go over your existing short-term policy and find you great individual long-term disability coverage!
The information above is intended for informational purposes only and is based on PolicyAdvisor’s own views, which are subject to change without notice. This content is not intended and should not be construed to constitute financial or legal advice. PolicyAdvisor accepts no responsibility for the outcome of people choosing to act on the information contained on this website. PolicyAdvisor makes every effort to include updated, accurate information. The above content may not include all terms, conditions, limitations, exclusions, termination, and other provisions of the policies described, some of which may be material to the policy selection. Please refer to the actual policy documents for complete details. In case of any discrepancy, the language in the actual policy documents will prevail. A.M. Best financial strength ratings displayed above are not a warranty of a company’s financial strength and ability to meet its obligations to policyholders. All rights reserved.
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