What is Disability Insurance? Disability Insurance replaces a portion of your income should you become unable to work and earn an income as a result of injury or illness. It is not income replacement. Disability Insurance is designed to protect you from possible loss of income and is available for a wide range of working people – business owners, professionals, full-time workers, part-time workers, and home-based workers.

What is a Disability? That depends on how your Disability Insurance policy defines a disability and it will vary from policy to policy. It can be described as being:

  • Unable to perform the duties of your usual job
  • Unable to work at any job for which you are qualified by education, training, or experience
  • Unable to work at any job at all

Some Disability Insurance policies will cover you for disabilities as a result of accident or illness while others will cover you for disabilities as a result of accident, but not illness. It is important to make an informed decision on what type of Disability Insurance will best meet your needs.

Do I need Disability Insurance? How would you be able to support yourself and your family if you were suddenly disabled and unable to work? Disability doesn’t discriminate; it can happen to anyone from any walk of life and in any income bracket. According to Advocis nearly 2.3 million Canadians, or almost 17% the total workforce, are now self-employed, and that number is growing rapidly. Provincial workers’ compensation programs or the federal employment insurance program provide basic disability coverage with limited coverage and relatively low benefits. You will need additional income protection.

According to Human Resources and Skills Development Canada

  • About 4.4 million Canadians (14.3%) reported having a disability in 2006
  • Lack of mobility, pain, and reduced agility were the three most reported disabilities among adults aged 15 and over
  • One in every 53 employed workers in 2007 was injured or harmed on the job and received workers’ compensation as a result

What does Disability Insurance Cover? Disability Insurance may replace a portion of your income if you have a:

  • Partial disability
  • Recurrent disability
  • Presumptive total disability – if before age 65 you suffer the total and irreversible loss of speech, or hearing of both ears, or sight of both eyes, or use of both hands or both feet, or use of one hand and one foot
  • Catastrophic total disability – if before age 65 you satisfy the Loss of Independent Existence definition, as defined by your policy
  • Transplant surgery – if you become disabled from a surgical procedure in which you are the donor of a body part transplanted to another person
  • Rehabilitation program – if you learn a new occupation while you are totally disabled, you may participate in a pre-approved vocational program

There are many riders that may be added to a Disability Insurance policy and may include:

  • Cost of Living Adjustor – Helps protect your benefit from inflation while you are disabled
  • Accidental Death and Dismemberment – Pays you or your estate a lump sum for loss of life, sight in both eyes, both hands, both feet, one hand and one foot, or the use of both hands or both feet, or of one hand and one foot
  • 24-Hour Injury Protection – Pays a monthly benefit while you are disabled due to injury that occurs any time of day, on or off the job
  • 24-Hour Sickness Protection – Pays a monthly benefit while you are disabled due to sickness that occurs any time of day, on or off the job
  • Hospitalization Benefit – Pays a pre-specified amount per day while you are hospitalized due to injury
  • Health Care – Pays a benefit if you contract HIV, Hepatitis B or Hepatitis C and legislation or regulations prohibit you from performing your occupation
  • Long Term Injury Protection – Extends your benefit period to age 70 if you are totally disabled due to injury when the benefit period on your basic policy expires. A rehabilitation program benefit is also available
  • Lifetime Accident and Graded Sickness Benefit – Pays a monthly benefit from age 65 for life while you remain totally disabled
  • Survivorship – A lump-sum benefit will be paid to your estate if you die while receiving your monthly income benefit
  • Return of Premium 50% – Returns 50% of the annual eligible premium paid or waived under your policy on certain dates if you are not disabled and your claims have been minimal
  • Return of Premium – Surrender 50% – Returns a portion of the eligible premium you paid if you surrender your policy on one of the optional surrender dates
  • Limited First Day Accident – Pays a benefit starting the first day of total disability from an off-the-job injury, subject to certain limitations and exceptions
  • Future Earnings Protector Option – Provides the opportunity to increase your monthly benefit, regardless of changes in your health
  • Own Occupation Protection Rider – Pays a monthly benefit while you are totally disabled in your regular occupation even if you are working in another occupation
  • Business Overhead Protection – Reimburses your share of eligible overhead expenses provided your business suffers a net loss after deduction of all business expenses allowed under the Income Tax Act due to your being disabled