Disability Income
Your most important asset is your ability to work and earn an income. Your entire lifestyle is dependent on your income. The chance of becoming disabled due to injury or illness during your working years is very high.
Have you considered how you would maintain your lifestyle if you got injured or suffered an illness that prevented you from working even for a few months? While no one likes to think about becoming ill or being injured you can’t afford to ignore the possibility.
What is Disability Income (DI)?
Disability Income Protection, commonly known as Disability Insurance and Loss of Income benefit, provides financial security should an accident or an illness occur that prevents you from working and earning a living.
A Disability Income Benefit provides you with a portion of your income should you be disabled as a result of Injury or Illness and unable to work and earn a living. There are different different definitions ( own occupation, regular occupation, any occupation ) Elimination Periods (EP), (length of time to wait before benefits begin), and different Benefit Periods (BP), (length of time benefits will be payable), that will allow you to choose the plan that best suits your needs.
THINGS TO KNOW ABOUT DISABILITY INSURANCE
As an employee don’t I have Income protection?
You probably have Employment Insurance and Workplace Insurance coverage. Employment Insurance pays 66.75% of your income for up to 120 days.
Workplace Insurance, known as WSIB or WCB pays up to 85% of your earned Income for up to age 65, if you are hurt at work. It does not pay if you get sick (unless it’s work related).
Unless your company has a group plan, you may have significant holes in your coverage. If you are not covered for loss of Income after 120 days for disabilities you should purchase Long Term Disability benefits to age 65 or to age 70.
You can also purchase “off the job” Injury coverage, with 24-hour Illness coverage
As a self-employed person I write down my income for tax purposes, how can I get Income protection?
There are Disability Plans that allow you the option of using gross revenue to calculate benefits. With such a coverage, Proof of Income is only required in the event of a claim if your benefit is more than $1000 monthly. Otherwise no proof of income is required.
How do I protect my Income?
Some Disability Insurance plans will cover up to 75% of your gross verifiable Income. In some cases they may also use Gross Business income to determine your eligibility amount.
What sort of coverage should I get?
That depends on how much you have put aside to cover emergencies. And what other income protection you have. Apart from the TYPE of plan, there are THREE other considerations that affect price.
- Elimination periods – How long you wait until coverage commences after a disability, Injury coverage can be 1st day, or 15, 30, 60,90 or 120 day. If you are going to be off work tomorrow it’s likely as a result of an accident, if you don’t have 60 days Income in reserve, we recommend 1st day coverage.
- Benefit Periods – How long benefits are payable, after a claim commences, you can get 2 year, 5 year, 10 year, to age 65 or to age 70. You can add a Sickness disability if you qualify. You can select a 2 year, 5 year, 10 year, to age 65 or to age 70 Illness benefit period.
- Policy Definitions differ by product. The cheapest is not always the best, and neither is the most expensive always the best. You should understand the key policy definitions explained before you buy a policy.
We are here to help and our brokers, agents or advisors would guide you through the available choices of Disability Income Insurance.
What about Injury Only coverage?
Many self employed prefer Injury only coverage because of cost or are required to carry an alternative to a workplace Injury plan by their General Contractor, or their company with whom they are contracted as an independent operator. Some Accident Disability Plans provide 1st day Injury coverage, with Injury benefits payable to age 70. Coverage is either 24-hour, or you can select non-occupational Injury coverage if you carry a workplace Injury Insurance Plan.
