What is Disability Insurance?
Disability insurance is designed to replace a portion of your income if you become disabled and are unable to earn an income. A disability can result from a number of causes, including an injury, a serious illness or a mental health issue. And the duration of a disability can be either short- or long-term. Coverage can be in place in terms of 10 years, 20 years or to age 75 years old.
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1 in 3 Canadians
How would a disability affect your ability to earn an income? Statistics but a new study for RBC says that one-in-three working Canadians will experience a period of disability lasting longer than 90 days during their working lives. It also suggests nearly half of Canadians underestimate how frequently disability actually occurs. In reality, 62% of Canadian workers have been exposed to someone having taken time off of work due to a disability, with 25% having had taken this time themselves. Even a temporary disability could affect your ability to work and take home a paycheque. |
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Disability Insurance is a secure way to protect your families lifestyle from the risk of an injury. The insurance is based on your currant level of income, and up to 70% of your gross income can be replaced. Waiting periods are often 30, 60 or 119 days.
Do you need Life, Critical Illness, and Disability Insurance?
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Common Definitions
Elimination or Waiting Period-is the time between injury or illness and when the payments to the insured would begin. Often a waiting period would be 30 days, 90 days or 120 days. The longer the waiting period, the lower the disability insurance premium.
Occupation Class- various categories of occupation based on the potential for work-related disabilities. For example, a lawyer practicing corporate law is more likely to have a lower exposure to a work related disability than an assembly line worker.
Definition of Disability (Total Disability)-
Elimination or Waiting Period-is the time between injury or illness and when the payments to the insured would begin. Often a waiting period would be 30 days, 90 days or 120 days. The longer the waiting period, the lower the disability insurance premium.
Occupation Class- various categories of occupation based on the potential for work-related disabilities. For example, a lawyer practicing corporate law is more likely to have a lower exposure to a work related disability than an assembly line worker.
Definition of Disability (Total Disability)-
- Own occupation: The insured cannot perform the important duties of their own (regular) occupation, or at least not on a full-time basis. (NOTE: An insured can work full or part time in another occupation and may continue receiving 100% of the monthly income benefit while totally disabled in regard to their own occupation)
- Regular Occupation: The insured is unable to perform the essential duties of their own occupation. Although similar to 'own occupation' regular occupation provides for a reduction in (or elimination of) benefits should the insured choose to work in another occupation while disabled. Benefits may be reduced should they begin to work in another occupation, but they would not be compelled to work simply because they are able to do so.
- Any Occupation: The insured cannot perform the duties of any occupation for which they are reasonably suited by education, training, or experience. The insured is not engaged in any other occupation for remuneration or profit.
- Partial Disability: After the insured has returned to work, the partial disability benefit provision contained in some disability policies provides for payment of a portion of the disability income for as long as the claimant is unable to perform all of the essential duties of their occupation (or until the benefit period expires). The insured would receive a percentage of the total disability benefit (usually 50%) while partially disabled.
- Presumptive Disability: Is a disability that results from a significant and permanent injury or sickness, such as the permanent total blindness, the loss of the power of speech, the loss of hearing or the loss of use of two or more limbs. An insured who qualifies under the presumptive disability provision will receive full benefits under the policy even if they are able to return to work full time.
