DISABILITY INSURANCE

Disability Insurance, also known as Disability Income Insurance insures a person’s income against a risk of disability which can inhibit the person to earn the usual livelihood. Disability insurance provides you a financial support if you are disabled and unable to work and make a regular income. One of ten people in Canada gets injured before the age of 65 for more than 90 days. The possibility that one can get disabled is usually ignored but cannot be avoided in a long run. Having a disability insurance lets you enjoy your assets without risking them if disabled at a later stage. This is also known as Disability Income Insurance.

Total Disability Insurance

Total Disability Insurance is designed to take off the financial pressure in case of a sickness or accidental injuries. The lump sum amount is paid by the Insurance Company to pay off debts or medical expenses. The Definition of Total and Permanent Disability varies with the Insurance product you buy. You have a choice to choice either insurance against being able to work in your “Own Occupation and not being able to work in “Any Occupation”.

Total Disability benefits are paid to an insured individual in case of an accident, illness or if the person is unable to do his/her job. There is a difference between Own Job and Regular job. It means a disabled person might be able to pursue some other occupation or regular job while Own job is the occupation the person is trained for or skilled at. For example, if an insured surgeon has an income of $30,000 per month and losses an arm in an accident. It is evident that he can’t operate to treat patients disabling him from his Own Occupation but he can still work as a medical administrator. If the surgeon bought a policy for $10,000 per month for a lifetime, he will get the amount every month despite him being working as a Medical Administrator.

The time for which you have to wait under an influence of an injury/sickness before you can claim for a payment from the insurer is known as the Elimination Period. Also known as Qualifying Period, it can be understood as the minimum time for which one has to be ill to claim for a Disability Insurance. It is quite logical to say that for a lower elimination period you have to pay more premium amount and vice-versa. You can go for products with higher elimination period but the risk is not worth taking, especially when your life is at stake. Furthermore, this period cannot be accumulated over multiple occasions and has to be at a single stretch to claim for a Disability Insurance.

Short and Long Term Disability Benefits:

A Short Term Disability Plan insures a person against disabilities for a short period, generally two to five years. This plan, at times is provided by the employer but in absence one can personally buy a Short Term Plan for coverage against disability. In these policies you tend to have a shorter elimination period and similarly the coverage lasts for a shorter period. Conversely, a Long Term plan insures a person for a long period of time and starts from where short term benefit ends. The long term disability plans do not cover for the life of a person with disability, but the coverage can be extended till the age of 65. It is obvious that the premium one has to pay will directly depend on the term for which he wants disability coverage.

Advantages:

Income and benefits provided by Individual disability insurance can be used to compensate for loss of income. There is no specific venue of the occurrence of the disability, it can be work or home, that is why Individual Disability Insurance is essential; Disability insurance is relatively inexpensive and helps you pay your medical bills as these benefits are paid out monthly.  Disability insurance by the company only provides essential income for accidents and injuries in the work premises. Hence, one can only enjoy the benefits if injured in the company premises.

Disability Insurance by Employer vs. Individual Disability Insurance:

Employer’s compensation is limited to the company premises while with an individual Disability Insurance you get coverage on and off-duty.

Unemployment due to disability is covered for a very short period while in Individual Disability Insurance you can choose the term of coverage.

Disability Insurance by Employer may not cover for other living costs and cost of medical services while with Individual Disability products you get to choose what components you want in the coverage.