- Disability insurance is also known as wage loss or income security insurance and usually takes the form of a monthly benefit paid to an insured person who becomes disabled following an illness or injury. The goal of this kind of coverage is to compensate for the insured person’s loss of income.
- Generally speaking, insured persons have a range of different insurance amounts to choose from, however the benefit paid in the event of disability is limited to a certain percentage of their regular income, e.g., 60%, 66 2/3%, or 70%.
- Another type of disability insurance is offered, designed to cover the monthly expenses of running a family, for instance rent and groceries. The amounts paid under this plan are lower and are not tied to the insured person’s salary. A variation of this coverage is aimed at self-employed workers and covers certain business costs associated with running a company.
- Benefits may be paid for a set number of years, e.g., 5 years, or until the insured person reaches a set age, e.g., 50, 55, or 65.
- At the time of disability, the benefit is usually coordinated with those paid under public plans like the Canada Pension Plan or worker’s compensation, or under private plans, to ensure that the total amount does not exceed the percentage of the insured person’s regular income specified in the contract, e.g., 60%, 66 2/3%, or 70%.
- This type of insurance is generally combined with other types of life and health insurance, but it may also be purchased separately.
- This kind of coverage protects insured persons from financial worry by ensuring they can meet their main obligations in the event of an illness or accident and take the time they need to recover properly.
- Disability benefits are nontaxable.
- Disability insurance is especially attractive to those not covered by a group insurance plan and to the self-employed.
Warning: The above text is of general nature and is intended for explanatory purpose only. Each of the products described above has its own specific features. Moreover, only the product contracts contain the complete terms and conditions as well as restrictions and exclusions to which they are subject.