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- Disability insurance in Canada typically covers 60–70% of your pre-tax earnings, helping you manage essential expenses like housing, groceries, and bills
- On average, the cost of disability insurance in Canada ranges from 1–3% of annual income, or about $40–$125 per month for low-risk, younger applicants
- Premiums vary based on several elements, including your age, health, occupation risk class, chosen benefit period, elimination period, and any added riders such as cost-of-living adjustments or own-occupation coverage
- You can lower your disability insurance costs by applying at a younger age, selecting longer waiting periods before benefits begin, tailoring benefit amounts to actual needs, and comparing multiple insurers for the best rates
Living with a disability can change a person’s life overnight, and the financial impact can be just as overwhelming. According to a 2022 survey, more than one in four Canadians live with one or several disabilities, highlighting the importance of financial protection. That’s where disability insurance in Canada steps in, offering income replacement when illness or injury prevents you from working.
However, despite the figures, most people in Canada worry about the cost of disability insurance. In this blog, we’ll break down typical premium ranges, factors that affect pricing, and how costs vary across provinces so you can make an informed decision about your coverage.
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What is disability insurance in Canada?
Disability insurance in Canada is a type of insurance that replaces part of your income if you’re unable to work due to an illness, injury, or disability. Its purpose is to protect your financial stability by covering everyday expenses, such as rent or mortgage, bills, and groceries, when you are unable to earn your regular salary.
Unlike health insurance (which pays for medical costs), disability insurance pays you a monthly benefit to replace a portion of your lost income, usually between 60–70% of your pre-tax earnings.
There are two main types of disability insurance in Canada:
- Short-term disability insurance: Provides coverage for a limited time (typically 17–26 weeks) while you recover
- Long-term disability insurance: Offers benefits for an extended period (often up to age 65) if you have a serious or permanent disability that prevents you from working
How much does disability insurance cost in Canada?
Disability insurance premiums in Canada vary depending on your income, age, occupation, health, and the type of coverage you choose. On average, Canadians can expect to pay between 1% and 3% of their annual income for disability insurance.
For example, if you earn $50,000 per year, your premiums would typically fall between $500 and $1,500 annually, or about $41 to $125 per month.
However, costs can be higher for more comprehensive coverage or riskier professions. In fact, some estimates suggest that long-term disability insurance can cost as much as 9% of your salary, in case you have a high-risk job. This is especially true if you opt for:
- A higher monthly benefit amount,
- Longer benefit duration (e.g., coverage up to age 65), or
- Riders and add-ons like cost-of-living adjustments or “own-occupation” coverage
To illustrate how disability insurance premiums are calculated, let’s consider the example of a 30-year-old, non-smoker individual looking for disability insurance coverage in Canada:
- Benefit amount: $3,000 per month
- Occupation class: Accountant (4A, low-risk professional category)
- Age: 30
- Status: Non-smoker
- Waiting period: 90 days
Average monthly premium for disability insurance in Canada
| Coverage length | Monthly premium – Male | Monthly premium – Female |
| 2 Years | $29/month | $53/month |
| Up to Age 65 | $51/month | $95/month |
* Illustrating the cost of disability insurance for a 30-year-old, non-smoker individual, seeking $3,000 per month in coverage
What factors impact the cost of disability insurance in Canada?
The cost of disability insurance in Canada isn’t one-size-fits-all. Premiums depend on several factors such as the age of an individual, their occupation, income and benefit amount, lifestyle, as well as additional riders included within the plan. Understanding these helps you predict your costs and choose coverage that fits your budget.
Age and gender
Age is one of the strongest predictors of disability insurance cost. Younger applicants usually pay less because they are seen as lower risk, while premiums rise as you get older, particularly after age 40. Gender can also influence pricing, and in some cases, women may pay slightly more than men due to longer claim durations.
Occupation and risk class
Your line of work has a direct impact on your disability insurance premiums. Office-based professionals are usually charged lower rates. However, physically demanding or high-risk jobs, such as trades, healthcare, or manual labour, tend to pay higher premiums because insurers see them as more likely to file a claim.
Income and benefit amount
The amount of income you choose to insure also shapes the cost. Disability insurance typically covers 60 to 70 percent of your pre-tax income. This means higher-income earners, or anyone opting for a larger monthly benefit, will face steeper premiums compared to those insuring a modest amount.
Benefit period
The benefit period refers to how long your policy will pay out if you become disabled. A shorter period, such as two to five years, results in lower premiums. However, a policy that pays until age 65 provides stronger protection but comes at a significantly higher cost.
Elimination period
Also known as the waiting period, this is the time between when you become disabled and when benefits start. Shorter elimination periods, like 30 days, increase premiums, while longer ones, such as 90 or 120 days, reduce them because you are taking on more initial financial risk.
Health and lifestyle
Your personal health history and lifestyle habits heavily influence premiums. Smokers, individuals with chronic illnesses, or those engaging in high-risk hobbies such as rock climbing usually pay more. Applicants with a clean medical record and healthy habits are rewarded with lower premiums.
Riders and add-ons
Optional features known as riders can make your policy more robust but also raise costs. Popular add-ons include cost-of-living adjustments, own-occupation coverage, and future purchase options. While these improve protection, they also increase monthly premiums.
Individual vs. group coverage
The type of plan you choose also matters. Employer-provided group coverage is often more affordable and may even be subsidized by your company. In contrast, individual policies give you more flexibility and customization but generally come with higher premiums.
How much disability insurance coverage do you need in Canada?
When deciding how much disability insurance coverage you need in Canada, the general rule of thumb is to replace 60 to 70% of your pre-tax income. This level of coverage ensures you can continue paying for essential expenses such as housing, groceries, utilities, and loan payments if you are unable to work due to illness or injury.
Since disability benefits are often tax-free when you pay premiums personally, this percentage is usually enough to maintain your standard of living without over-insuring. The exact amount you need will depend on your lifestyle, financial obligations, and whether you have other sources of income, such as a spouse’s earnings, employer benefits, or savings.
If your expenses are high or you’re self-employed without group coverage, you may want to aim toward the higher end of the range.
How does the cost of disability insurance differ in various Canadian provinces?
While the base cost of disability insurance in Canada stays fairly consistent, actual premiums can vary slightly depending on the insurer and province. On average, Canadians can expect to pay 1% to 3% of their annual income for coverage, though this may rise for higher-risk jobs or more comprehensive plans.
For example, if you earn $50,000 annually as a low-risk, younger applicant:
- In Alberta, typical disability insurance premiums range from $40 to $120 per month
- In British Columbia, disability insurance costs are similar, averaging $45 to $125 per month
- In Manitoba, the cost of disability insurance is slightly higher, usually $50 to $130 per month
Overall, premiums do not differ drastically between provinces, but local market factors and provider pricing can create small variations.
Does age affect disability insurance premiums in Canada?
Yes, age has a direct impact on disability insurance premiums in Canada. Insurers view younger applicants as lower risk because they are generally healthier and less likely to file a claim. As a result, someone in their late 20s or early 30s will usually pay much lower premiums compared to someone in their 40s or 50s for the same coverage.
Premiums typically rise as you get older, especially after age 40, since the chances of developing a disability increase with age. For example, a healthy 30-year-old professional might pay around $50 to $80 per month for a moderate long-term disability plan, while a 45-year-old in the same occupation could pay $120 or more for similar protection.
Applying earlier not only locks in lower premiums but also makes approval easier, since health issues that come with age can further increase costs or limit coverage options.
How can you save on disability insurance premiums in Canada?
Disability insurance can feel expensive, but there are several ways to keep costs manageable without sacrificing essential protection. Here are some proven strategies:
- Choosing longer elimination periods: The elimination period is the waiting time before your benefits begin. A policy with a 90-day or 120-day elimination period will cost less than one with a 30-day period. If you have savings or an emergency fund to cover short-term expenses, opting for a longer elimination period can reduce your premiums significantly
- Riders and add-ons: Riders like cost-of-living adjustments (COLA), own-occupation coverage, or future purchase options enhance protection but also increase costs. Before adding them, consider whether the extra security justifies the higher premiums
- Comparing quotes from different providers: Premiums can vary widely across insurers, even for applicants with similar profiles. Comparing quotes from multiple providers helps you find the most competitive rate. Working with an insurance broker (such as our experts at PolicyAdvisor) can simplify the process and uncover discounts you might miss on your own
- Applying at a younger age: Premiums increase with age, so applying in your 20s or 30s can lock in lower rates and ensure coverage before health issues develop
- Tailoring benefit amounts: While it’s tempting to ensure the maximum benefit possible, you may not need it. Choosing coverage that replaces 60–70% of your income keeps premiums affordable while still offering strong protection
How to get the best disability insurance quotes in Canada?
If you want the best disability insurance quotes in Canada, the first step is to compare options from different providers to find coverage that fits your financial needs.
PolicyAdvisor makes this simple by partnering with Canada’s leading disability insurance companies, giving you access to a wide selection of competitive plans all in one place.
With just a few quick questions online, you can get personalized disability insurance quotes in Canada. Once you’ve found the right plan, our licensed experts provide proper advice and ongoing support, so you fully understand your policy and remain protected over the long term.
Schedule a call with us today to safeguard your income against life’s uncertainties!
Frequently asked questions
Does disability insurance cover mental health conditions?
Yes, many disability insurance policies in Canada cover mental health conditions such as depression, anxiety, or stress-related disorders, as long as they prevent you from working. However, coverage depends on the policy terms and medical documentation provided.
Some insurers may impose waiting periods, exclusions, or stricter eligibility rules for pre-existing mental health conditions. Since mental health is a leading cause of disability claims in Canada, it’s important to review your policy carefully and ensure you have adequate protection.
What happens if I stop paying premiums?
If you stop paying your disability insurance premiums, your coverage will lapse, and you will no longer be protected. This means you won’t receive benefits if you become disabled in the future. In most cases, insurers allow a short grace period for missed payments, but if you don’t resume payments in time, the policy is cancelled.
Reapplying later may require medical underwriting and could result in higher premiums or exclusions, especially if your health has changed since your original application.
Can I get disability insurance after a health issue diagnosis?
Yes, it’s still possible to get disability insurance after being diagnosed with a health issue, but your options may be limited. Insurers may charge higher premiums, exclude coverage for your specific condition, or offer reduced benefit amounts.
The outcome depends on the type and severity of the diagnosis, your treatment history, and overall health. If traditional policies aren’t available, simplified or guaranteed issue disability insurance may be an option, though they often come with higher costs and limited coverage.
Is disability insurance tax-deductible in Canada?
In most cases, disability insurance premiums are not tax-deductible in Canada if you pay them personally. The benefit is that any income you receive from a personally paid policy is usually tax-free. However, if your employer pays the premiums for group disability insurance, the benefits you receive are considered taxable income.
This makes it important to understand how your policy is funded. Paying your own premiums generally provides better after-tax protection, since you won’t have to share your disability benefits with the CRA.
Disability insurance in Canada protects income when illness or injury prevents you from working, typically covering 60–70% of pre-tax earnings. Premiums usually cost 1–3% of annual income, averaging $40–$125 per month, though they can reach up to 9% for high-risk jobs or comprehensive long-term coverage. Key factors affecting cost include age, occupation, health, benefit period, elimination period, and add-ons like cost-of-living adjustments. Group plans are often cheaper, while individual policies offer flexibility. Applying young, choosing longer waiting periods, and comparing providers help reduce costs. Coverage is essential to maintain financial stability, with benefits often tax-free when paid personally.
Olivia Bush, “Disability Statistics in Canada for 2024,” Made in CA (Nov 4, 2024).
