Why have disability insurance? One out of six Canadians will suffer from an injury or illness that keeps them out of work for over 90 days at least once before they reach the age of 50. After the age of 50, the potential for illness or injury increases. Sadly, living expenses and bills do not disappear when you cannot work, and you need to have a way to cover your expenses.
This reason alone is why disability insurance is important.
Unlike other types of events that you can plan for in your life, you never know when an accident will occur resulting in a disability or when an illness will strike. Your company may not have good insurance or only cover work related injuries. You might not qualify for government disability. The only sure way to be prepared is to have private disability insurance in place.
Your Options for Insurance Protection
Most people don’t think twice about purchasing life insurance policies. They do not want to leave their loved ones unprotected in the event of their death. It is a way of taking care of their family after they are gone. However, it is just as important to take care of your family if a disability happens and you cannot work.
There are two types of insurance plans that are often offered to individuals to help with this type of situation: Private Disability Insurance Plans and Critical Illness Insurance.
- Disability insurance is a plan that covers injuries or illnesses that prevent you from working for an extended period of time.
- Critical illness insurance is a plan that offers you a lump sum payment if you are diagnosed with a disease and cannot work.
Why Disability Insurance Makes More Sense
If you are diagnosed with any illness that prevents you from working, or if you are injured and cannot work, private disability insurance provides more coverage for you. This insurance plan will kick in and cover a portion of your lost wages.
In comparison, critical illness plans are limited to many conditions and often do not pay out to their clients in their time of need. Depending on the policy you purchase, you may be limited to five or six conditions that qualify for payment. Very costly policies may increase this coverage up to 25 conditions, but the cost of these policies is often unaffordable.
One Final Reason
Many people will overlook a private disability insurance plan because their employer already provides similar coverage. While this is great if you have these benefits at work, most employer plans are very basic plans and have low payout amounts. The average employer-sponsored disability insurance policy pays between 40 and 50 percent of your lost wages while you are disabled and often has a cap on benefits.
This limit on your replacement wages may not be enough to cover your mortgage and living expenses. Disability insurance from a private provider — having the additional coverage will cover most, if not all, of your missing income when you are unable to work.
Insurance policies of all types can be complex and confusing. If you have had your coverage denied or have questions about making a claim, speak to an experienced disability lawyer. A lawyer can help you work through the small print to understand your policy and file and necessary claims.
