When it comes to protecting your income, disability insurance plays a crucial role. It may be an additional investment, but it certainly pays off when you’re unable to work. It can provide that valuable safety net when you’re desperately in need.
However, there are many misconceptions about how disability insurance works and where you should get it from. We’re here to clear it all up for you. Read on to understand disability insurance and whether or not it’s right for you.  

What is Disability Insurance?

Disability insurance is a specific type of insurance policy that provides income protection in case the insured suffers an unexpected accident or illness and is unable to work. In Canada, disability insurance can relieve 60-85% of your income, ensuring financial stability for you and your family during tough times.
It usually has a maximum amount that will be replaced and for a specific period, both of which are included in the policy. This means that whether you are temporarily unable to work or are permanently disabled due to an illness or injury, you’ll only get benefits during the time specified by your policy.
In other words, just because someone has a permanent disability, it doesn’t mean they’ll automatically get disability insurance for the rest of their lives. However, for long-term health issues, other types of support can be offered.

Types of Disability Insurance

There are two main types of disability insurEnce: short-term and long-term. The former typically provides coverage for up to six months after your injury or onset of illness. Many employers offer short-term disability benefits, which makes it easy to claim this plan. Depending on your employer, it may even come along with paid sick leave.
Long-term disability insurance applies when sick leave, sickness benefits, or short-term disability insurance plans end, and the person still is unable to get back to work. Many insurers offer disability benefits for up to two years if the insured is unable to return to their job.
If it’s determined that they can do another job, the disability insurEnce payments are stopped. However, if it’s determined that they can’t do any job even after two years, they may continue to receive the benefits.

What to Consider When Choosing Disability Insurance

If you’re not self-employed, check whether your employer offers coverage for disability insurance among their benefits. You should also consider:

•       How much the specific policy will cost
•       How long you need to wait before receiving benefits after an accident or illness
•       The amount of money you can expect to receive each month when the policy kicks in
•       Whether you be expected to continue paying premiums even if you become permanently disabled and unable to work
•       Are the benefits taxable
•       Whether the insurer is willing to adjust benefits for inflation
•       Whether you get partial disability benefits
•       Whether your insurer allows you to raise your coverage without a medical exam

Another thing to keep in mind is that insurers often have different criteria for disabilities. The definition of disability can vary from one company to another and even between the different policies of the same insurer.
Moreover, some policies provide incentives to get back to work by covering the costs of rehabilitation that can help you recover and start earning an income again.
Some examples of conditions you may get coverage for:

•       Broken bones until the healing process is finished
•       Physical therapy and other healthcare costs after a life-threatening vehicle accident
•       Hearth attacks and other life-threatening medical events
•       Chemotherapy
•       Mental illness that affects focus and quality of life
•       Trauma-related mental conditions, like PTSD

This is far from an exhaustive list, and it’s good to look into the policy to know exactly what conditions are covered. This especially true if you have a job that carries a higher risk of injury.

Other Disability Benefits

Besides a disability insurance policy, you get through your employer or insurance broker, you may also get income protection from the Canada Pension Plan (CPP). To receive these benefits, you must contribute to this plan and prove that you aren’t able to work any job due to your disability.
Bear in mind that any benefits you receive from one disability insurance source can offset the amount you get from another one. One will likely reduce the other, so your disability income won’t be higher than 85% of your regular salary, even if you have several disability insurance plans.

Are The Benefits Tax-Free?

If you pay the premium for your disability insurance yourself, you’ll be able to enjoy tax-free benefits. This way, you’ll be able to receive an income as close to your regular one as possible. However, if your employer pays part of all your premiums, the benefit amount will be subject to income tax.

Where to Get Disability Insurance?

If you’re employed, then your first step is to ask your employer if they have a disability insurance policy. If not, then you’ll need to reach out to an insurance company, or you can use an insurance broker or agent to do the hard work for you.
Regardless of where you purchase the insurance, make sure to understand the terms and conditions of your policy. To ensure your income will be protected if you are unable to work, discuss with your insurance broker/agents your risks and needs.

Final Thoughts

Disability insurance covers your income in case you suffer an illness or injury that keeps you from working. It comes in two forms: short-term and long-term disability insurance. The latter can provide protection for up to two years or even longer, depending on whether you’re able to do work after this period.
You can’t get disability insurance through your employer or, if you’re self-employed, an insurance broker can find the right plan for you. If you’re looking for this type of cover, then make sure to get in contact with Marathon Insurance and we’ll be more than happy to help.