Disability income insurance quote Disability Insurance – IDC Insurance Direct Canada



Disability income insurance quote

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Disability Insurance

What If You Suddenly Lost Your Income due to Sickness/Injury

The purpose of disability insurance is to provide the income so that you can maintain your life style until you are cleared to return to work. It transfers the financial risk associated with a serious disability from you to an insurance company. Recent industry statistics from Manulife show the following cumulative risk of suffering a period of disability lasting at least 90 days¹

Disability age 40

Disability age 50

Disability age 60

¹The risk of disability depends on your age, sex, and occupational factors, however, once disability does occur, chances are it will last several years. The average length of a disability lasting over 90 days is about 3 years (Source: Canada Life).

This chart provides a breakdown of the reasons for disability claims when compared against the leading risk of musculoskeletal disability. It is based on policy count of active claims of individual disability insurance products. It is interesting to note 30% were from mental disorders and nervous system issues.

“Somatic Conditions” includes chronic pain, chronic fatigue and fibromyalgia
“Circulatory System” includes coronary artery disease, heart attack, stroke and congestive heart failure
“Miscellaneous” includes digestive disorders, infectious disease, allergies, and respiratory conditions
“Nervous System” includes Multiple Sclerosis, Parkinson’s and Alzheimer’s
“Mental Disorders” includes major depression, bi-polar disorder
“Musculoskeletal” includes degenerative disc disease, arthritis, soft tissue damage to the back and joints

Provincial Workers’ Compensation Board would cover only about 8% of these claims and critical illness insurance would have paid a claim on between 16% and 26% of the claims that were paid through the disability insurance. It is possible for properly protected people to have a claim on both policies for the same period of disability.

Statistics used provided by Manulife Financial, December 2008

Disability Insurance Basics

We highly recommend that you seek the expert advice of a licensed disability insurance agent before considering a policy as policy terms and options can vary greatly from policy to policy. We have access to disability insurance products from top rated insurance companies in Canada. If you are an independent contractor or self-employed tradesman or professional and do not have disability insurance coverage, what is protecting your income?

A serious injury or illness that keeps you from working for an extended period of time can be financially devastating when you consider that:

  • Your current income will cease
  • Your future income will cease
  • Yet your business and/or personal expenses may continue

Disability insurance policies help protect you and your family by protecting your income in the event of a disabling injury or illness.

There are two types of disability policies available

  1. Short Term Disability Plans – This disability policy provides protection for a brief period, generally up to 120 days when Employment Insurance might not be available. This is only available as part of a group insurance or employee benefits plan, and not as an individual product.
  2. Long Term Disability Plans – Available either as a standalone solution or part of a group plan, Long Term Disability (LTD) comes in a few flavours. The focus here will be for standalone plans. LTD plans offer the several design criteria. To learn more about “Long term disability plans”, please select the tab above to get more detailed information.

Long Term Disability Plans – Available either as a standalone solution or part of a group plan, Long Term Disability (LTD) comes in a few flavours. The focus here will be for standalone plans. LTD plans offer the following design criteria:

  1. Elimination period – which is the number of days before the disability benefit will start to be paid for. For most plans the elimination period will be 30, 60, 90, 180 or 730 days, with the highest cost for the shortest elimination period, e.g. 30 days. There are a few plans where the elimination period can be as short as 1 day, before the benefit begins. It is important to understand that the first check will arrive approx. 15 days after the first month of eligibility. For example, if you are disabled on Feb. 1, and have a 90 day elimination period (the most popular), you have to be disabled for at least more than 90 days to receive a benefit. So in this example, if you are still disabled on May 1, the benefit period starts, then on June 1, the first benefit cheque will be issued, which you will likely receive by June 15th, or approx. 4.5 months after your initial start of disability.
  2. Benefit period – this is the duration they will pay a claim once the claim has been approved. Options are 2, 3, 5, 10 or to age 65, with to age 65 the most popular.
  3. Injury only, or injury and sickness – the best plans will pay a benefit whether you are disabled from an injury, or a sickness, e.g. heart attack, however some people may not qualify for sickness due to a preexisting condition. For this scenario, there are injury only plans also available from a few providers.
  4. On the job vs. 24 hour – some plans allow you to save money by choosing to only protect your being injured while not at work, the rationale being while on the job, you would be covered by Workers Compensation (WCB). The problem with this is WCB is notorious for either delaying payment, or just not paying at all, so a 24 hour plan is definitely recommended, as the best plan.

There is a lot more to long term disability insurance than is covered here, and you will definitely want to speak with one of our expert advisors to understand the many nuances of disability insurance.

Disability plans replace between 54-70 % of the policyholder’s gross taxable income, tax free, in the event that the policyholder becomes disabled. Some Canadian disability policies differ on how they define eligibility.

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