Do I need a disability insurance? | Jan Tejano - Independent insurance broker

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Do I need a disability insurance?

disability insurance

Most people neglect Disability insurance, here's a simple guide to why you need it, what kind of plan, and how much it cost.

Think about it. What will happen if a short-term or long-term disability prevented you from earning your regular income? Would you have the financial support you need to maintain your family's lifestyle?


Most of us have credit card bills, mortgage, or even supporting children's education. Would you be able to continue your standard of living if you are too ill or injured and not be ready to go back to work for a long time? It could also lead to medical bills and other unforeseen expenses needs, which quite expensive.

"1.6 million Canadians with disabilities were unable to afford required aids, devices, or prescription medications due to cost." - Canadian Survey on Disability, 2017

Who needs disability insurance?

If you are self-employed, an employee, a farmer, a construction worker, a miner, a truck driver, a cab driver, an instructor, or a plumber or any other worker without group disability coverage, the answer is probably NO.

Disability insurance something you must have, especially if you are the family breadwinner and your family depends on your income.

Consider it as insurance of your paycheck. It would ensure you if you lost the ability to earn income because of injury or illness. You will be still able to receive an income to cover your bills until you can go back to your work.

  • Just over 1 in 4 of today's 20 year-olds will become disabled before they retire., 
  • Over 22% of Canadians develop at least one disability. And it represents 6.2 million people. (Disability in Canada 2017)
  • Over 20% of working-age adults age 25-64 years develop a disability. 

Maybe you think that disability is caused by accidents, although it happens. But, the reality might surprise you. Illness like cancer, heart disease, diabetes, and other long-term illness are the culprit. Back pain, arthritis, and injury are also significant causes.

Most are not work-related, so worker's compensation does not cover it.

The risk of not being able to cover your daily expenses is higher if you don't have disability insurance. Disability insurance covers your most valuable asset- your ability to earn an income - and must be considered a part of daily financial planning.

What kind of disability insurance suits my needs? 

Once you consider buying disability insurance, you need to decide what kind of disability insurance.

Most disability insurance provides the same sort of protection, but under very different circumstances so essential to choose the right one.

The standard options available to people are:

  • Short-term disability insurance
  • long-term disability insurance
  • group insurance
  • workers compensation 

Do I need Short-term disability insurance?

Short-term disability coverage typically provides benefits up to 6 months while you are sick or injured.

Most people buy short term insurance max out before the six coverage.

The monthly premiums of short-term disability are relatively close to those of Long-term disability.

So I will recommend shopping around for private disability insurance.

Do I need long-term disability insurance?

Long-term disability insurance may be considered a priority for most people looking to protect their income.

The benefits of LTD generally begin when the following benefits end:

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  • Short-term disability
  • Sick leave benefits from the employer
  • EI benefits 

Most long term disability coverage will replace 60% - 70% of your regular income. Every disability insurance plan is unique.

Some company provides a benefit period of 2 years, five years, or up to 70 years of coverage if you are unable to go back to the job you had before becoming disabled.

Do I need disability insurance alternatives?

While long-term disability is a good selection, and also short-term policies can operate in the right situations, there are other forms of disability insurance that you ought to watch out for since they leave you vulnerable over time.

๐Ÿ‘‰ Employer-sponsored long-term disability insurance

Like short-term impairment insurance coverage, if you're able to get LTD supported via your company, it's worth looking into.

Nonetheless, it isn't a suitable replacement for an exclusive lasting plan.

The protection amount via an employer strategy can be restricted, and it's linked to your work, so you'll lose protection if you leave the job for whatever factor.

A private policy is portable as well as it will follow you to any employer you're with.

๐Ÿ‘‰ Canada Pension Plan (CPP) disability benefits

Available to people who contributed to the CPP, and this monthly payment is taxable to people who are not able to work because of disability.

To qualify for CPP disability benefit you must

โœ”๏ธ Have a severe prolonged disability - meaning that you have a mental or physical impairment that stops you from doing any work. Also prolonged that means your disability is long-term and indefinite duration is likely to results in death

โœ”๏ธ Be under the age of 65

โœ”๏ธ Meet the CPP contribution requirements - If you earn more than a minimum of $3,500 per year must contribute to the CPP.

With all limitations personally I still prefer personal or private disability insurance.


About the Author Jan Tejano

Jan is a licensed adviser in Manitoba. He has been helping individuals and families for the past 3.5 years. Apart from running my business, I spend most of my time reading, learning, developing skills, and helping other people develop theirs. His ultimate goal and mission are to inspire you to take charge of your money.

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