Understanding Disability Insurance

Disability Insurance, often called disability income insurance or income protection, protects your earned income against the risk that a disability will interfere with your regular income. It encompasses paid sick leave, short-term disability benefits, and long-term disability benefits.

Disability Income Insurance protects your earning power and provides a source of income in the event of disability. It protects against the risk of becoming disabled and unable to earn an income.

Disability Income Insurance is meant to replace part of your income if you are unable to work by paying a tax-free benefit. This disability benefit payment is a capped at a set percentage of your income as it is not being taxed.

Disability Insurance is paid after a disability is validated by a doctor and fulfilling a waiting period specified in your insurance policy.

The cost of Disability Income Insurance is impacted by the waiting period, the definition of total disability, the benefit period, the monthly payment, and other benefits of the policy. The waiting period has a large impact on the premium because the longer the waiting period, the less likely an insurance company will have to pay a claim.

The definition of total disability can relate to own occupation and any occupation. Own occupation relates to being unable to perform each duty of their own occupation on a full-time basis. Any occupation means that the benefits will only be paid if the individual is unable to perform the duties of any occupation for which the person is qualified.

There are two types of Disability Income Insurance; Short-Term Disability and Long-Term Disability.

Short-Term Disability coordinated with Employment Insurance covers the short term.

Long-Term Disability begins after Short-Term Disability and Employment Insurance have been paid out.

Who is Disability Income Insurance suited for?

• Those who recognize that they need to protect one of their most valuable assets, the ability to make a living.
• Do not have a long-term insurance plan through their employment.
• Wish to improve on the limitations of their group Long Term Disability (LTD) coverage.

What Disability Insurance can do for you

• Reduce the financial pressure of losing an income as a result of a long term disability.
• Allow you to focus on recovery with fewer financial worries.
• Avoid the need to make disruptive life changes due to financial pressure.

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