Disability insurance: frequently asked questions
Benefit amounts, waiting periods, self-employed coverage, taxation, the definition of disability, and whether a group plan is enough.
About one in three Canadians will experience a disability lasting more than 90 days before age 65. What is at stake is your income, not your property.
These questions cover how much is actually paid, how long before benefits start, whether benefits are taxed, and where a group plan falls short when part of your pay is variable.
What does disability insurance cover?
Disability insurance can pay a monthly benefit when an illness or injury prevents you from working. The situations covered depend on the definition of disability, the exclusions and the conditions of the contract.
How much does disability insurance pay?
The amount depends mainly on your income, your occupation and your existing coverage. The insurance generally aims to replace part of your income.
How long before benefits begin?
Benefits begin after the waiting period you choose, for example 30, 60, 90 or 120 days. A longer waiting period can reduce the cost of the insurance, but you must be able to cover your expenses during that time.
How long can benefits be paid?
Depending on the contract, benefits can be paid for two years, five years or up to a set age, often 65. They generally stop when you no longer meet the definition of disability set out in the contract.
Is my group insurance enough?
Not always. The covered amount can be limited and some income, such as commissions or bonuses, may not be included. An analysis helps determine whether supplemental protection is needed.
Can I get disability insurance if I am self-employed?
Yes. Disability insurance is especially important for self-employed workers who do not have a group plan.
Can I be covered for my specific occupation?
Some contracts offer a definition of disability tied to your regular occupation. Conditions vary depending on your trade, your experience and the plan chosen.
Are disability insurance benefits taxable?
In general, benefits from individual disability insurance are non-taxable when you pay all the premiums yourself. In a group plan, they can be taxable if the employer pays part of the premiums. The tax treatment depends on how the plan is structured.
Can I get insurance if I have a medical condition?
It depends on your health, the condition involved and the insurer’s rules. An exclusion, a limitation or an extra premium may apply after the file is reviewed.
How much does disability insurance cost?
The price depends on your age, your occupation, your income, your health, the insured amount, the waiting period and the benefit duration.
Why do I need disability insurance?
About one in three Canadians will experience a disability lasting more than 90 days before age 65. Without protection, you could deplete your savings. CSST and QPP offer limited protection.
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