Disability Insurance

Features of Disability Insurance

Provides a replacement income when you become sick or injured.
Unlike plans provided through employers that can end if you lose your current job, personal disability insurance plans cannot be taken away from you.
Disability insurance costs and options are highly dependent on one's occupation: a person with a dangerous occupation is more likely to become disabled, so will have higher costs and fewer options.
After age 65, modified coverage may be continued on an annually renewable basis as long as the insured continues to work full time. The benefit period is typically 24 months
The amount of coverage you purchase cannot exceed approximately 66% of your current earnings (ie. you cannot insure what you do not have). 66% of you income may not sound like enough to survive on, but the money paid from a disability insurance claim is tax free. After taxes, it is approximately equal to your regular income.

You can select the monthly income you receive while on disability.
Benefit period (the length of time money is paid during your disability) can vary from 2 years to age 65.
The waiting period before your first cheque arrives can be 30, 60, 90, or 120 days.
Own/regular occupation: additional options that, if selected, will provide money if you are unable to perform your "own" or "regular" occupation, even though you can still do other work.
Cost of living: an option that, if selected, will increase your disability insurance coverage each year to keep up with cost of living increases.
Guaranteed future additional insurance: an option that, if selected, would allow you to purchase additional coverage in the future, without having to prove your health.
Catch-up rider: If selected, pays a lump sum of money after 6 months of disability to make-up for the lost income during the waiting period. Living expenses don't stop during the waiting period before receiving your first disability insurance cheque. Catch-up rider helps recover this lost income.
Return of premium: if selected, refunds 70% of the premiums paid every 8-10 years. It also pays at death or policy expiry. These funds may be taken in cash, used to reduce future premiums, or both.