Disability Insurance, often called DI or disability income insurance is a form of insurance that insures the beneficiary's earned income against the risk that a disability creates a barrier for a worker to complete the core functions of their work. For example the inability to focus or maintain composure as with psychological disorders or an injury, illness or condition that causes physical impairment or incapacity to work. It encompasses paid sick leave, short-term disability benefits, and long-term disability benefits. Statistics show that in the US a disabling accident occurs on average once every second. In fact, nearly 18.5% of Americans are currently living with a Disability, and 1 out of every 4 persons in the US workforce will suffer a disabling injury before retirement.
- How is disability defined? Some policies consider you disabled if you are unable to perform the duties of any job. Better plans pay benefits if you are unable to do the usual duties of your own occupation.
- When do benefits begin? Most plans have a waiting period after an illness before payments begin.
- How long do benefits last? After the waiting period, payments are usually available till you reach age 65, though shorter or longer terms are also available.
- What dollar amount is promised? Can benefits be reduced by Social Security disability and workers' compensation payments? Are the benefits adjusted for inflation? Will the policy provider continue making contributions to your pension plan so you have retirement benefits when the disability coverage ends?
Disability Insurance in Canada: 5 Essential Buyers Tips
Disability insurance Canada helps you with monthly tax free income if you are unable to work due to an injury and/or illness. There are many factors to consider before coming to a conclusion to buy a disability insurance policy in Canada, the following 5 points will help you choose the plan that is right for you:
- Check that the insurance is injury only / injury and sickness disability protection. Injury and sickness disability coverage provides much more complete coverage and pays out your monthly tax free benefit in the event you are disabled to do an injury and/or sickness.
- Check if you want a cancelable or non-cancelable insurance policy. Non-cancelable coverage is more in cost, but the insurance company has to honor its premium and coverage. With a cancelable policy the insurance company has the option of increasing your premium or canceling your policy on a class wide basis.
- See if you qualify for an association and/or occupational discounts. Certain occupations qualify for a preferred premium classification. Some companies also offer multi life discounts.
- Know the elimination period and benefit period which best suits your budget. The elimination period refers to how long until you begin to receive your monthly benefit. The benefit period refers to how long you will receive your monthly benefit for. These two variables combined with your monthly benefit help determine the plan's monthly premium.
- Work with an independent broker who can provide you unbiased independent advice and select a disability plan which best suits your financial situation.