Disability Insurance

Would you be able to maintain your standard of living?

Everybody understands the value of life insurance and most of us who take our finances seriously have a solid life insurance policy in place. But what happens if you are unlucky enough to sustain a serious illness, chronic disease, or disability which prevents you from working? Your ability to earn an income is your most valuable asset. Disability insurance is designed to protect you from a possible loss of income.

Disability Insurance is the most commonly known and accepted form of insurance to help protect your family from a loss of income due to an inability to work. In the event of an injury or sickness rendering the insured unable to work, a disability policy will pay a monthly benefit up to sixty-six and two-thirds of the total income of the insured person (NOTE: Total income is gross income less expenses but before taxes). This type of coverage is crucial for self-employed individuals and people who do not have disability insurance through their employer or Association plan.

If you were to ask a group of working people whether or not they have disability insurance, most of them would say, “Yes.” But the fact is, most of these individuals are either under-insured or have inferior coverage. Government disability plans are very limited in scope and coverage amounts. Most group plans cap the monthly disability benefit for employees. For example, employees earning 75,000 a year may only receive $2,000 a month or less in disability benefits.

The benefits of Disability Insurance: Different types of insurance were created to fit the various needs and situations one might encounter. Life insurance, for instance, is offered to provide sufficient money coverage for those that are hit by the sudden loss not only emotionally, but also financially. On the other hand, when a person becomes (totally) disabled, not only the person is not fit to maintain sufficient income for themselves and their family, but on top of that the extra medical and other care for this person takes even more money out of their pocket, or the pocket of their family that has to provide the extra care for the once self-supporting. Therefore, disability insurance is often more important than life insurance.

Being classed as disabled doesn’t necessarily mean that the person is not able of some kind of employment, but it has been reported that around 15% of those filing for bankruptcy have done it due to illness or accident. As disabled, you are eligible to receive some government benefits, but they are very limited. The coverage group plans won’t match your current income either: they mostly cover only 50% to 60% of your net income.

When deciding whether to apply or not for the disability insurance, consider your options in case you become limited in earning a sufficient income. You could:

- rely on your spouse/family income
- use your savings or retirement funds
- sell your property/other assets
- live on credit
- be sufficiently covered by disability insurance that would supplement the missing income

The importance of Disability Insurance: What people mostly imagine under disability is the loss of mobility after a sudden accident related either to work or sport. But the statistic tells us quite a different story: people are twice as likely to be disabled due to a serious illness such as cancer, diabetes, or heart disease than to an accident.

Your chances of becoming disabled: When you’re young it’s easy to think you’re invincible and nothing will ever happen to you, but the hard truth is, if you’re under 65, you’re 60% more likely to become disabled than you are to die. Of course, the chances of becoming disabled gradually rises with age:

- 3 in 100 children up to 14 years of age become disabled
- 4 in 100 young adults between 15 to 24 become disabled
- 7 in 100 adults between 25 to 44 become disabled
- 17 in 100 adults between 45 to 64 become disabled
- 40 in 100 adults 65 and over become disabled
- 53 in 100 adults over 75 reported disability
* At the moment 14 in 100 Canadians (4.4 million) are classed as disabled.

Your individual needs must be considered and prioritized before making any decisions. I can help! Contact me today to help you determine your needs and decide which product is best for you.