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.

Uses of Disability Insurance

  • Replace lost income during times of disability
  • Provide money to pay business overhead in your absence