What protection do you have if accident or illness leaves you disabled and unable to work?

It is important that you consider the impact on you and your family if circumstances prevented you from working and you need assistance.   People often assume that there are government programs that will assist them.   However, government programs are limited, may not pay all your medical costs, and are unlikely to pay your mortgage.  

Here is an overview of the protection available:

Employment Insurance

If you are covered by government employment insurance, you may be paid up to 55% of your base salary to a maximum of $650.00 per week for up to 26 weeks if you are unable to work because of sickness, injury, or quarantine.  You must serve a one week waiting period before you apply.   You must  have accumulated 600 insured hours of work in the 52 weeks before the start of your claim or since the start of your last claim, whichever is shorter.

 A medical certificate must be obtained to confirm the duration of you incapacity and any fees requested by the doctor are entirely your own expense.  These 26 weeks may be the only coverage you are entitled to.

Canada Pension Plan

The Canada Pension Plan Disability Benefit provides disability pensions to eligible workers who become disabled in a severe and prolonged fashion(12 months or more).

The Canada Pension Plan (CPP) disability benefit is available to people who have made contributions to the CPP, and whose disability prevents them from working at any job on a regular basis.  Generally, you must have contributed to the CPP in four of the last six years.   The maximum benefit you can apply for is $1,538.67 per month and you may be eligible for a lesser amount   The disability must be long lasting or likely to result in death.   People who would qualify for disability benefits from other programs may not qualify for the CPP disability benefit.   You must apply for a disability benefit in writing and it may take a year or more to assess your claim. 

Employee Group Benefits

If you work for a major employer, you are likely to have employee group benefits that include some disability coverage.   Some smaller employers may offer employee group benefits that may have no or limited disability coverage.   If you are covered by your spouse's employee benefits, it is unlikely that you have disability coverage through that plan. 

If you have employee group benefit coverage, the plan may only partially cover you.  In any case, disability insurance protection provided by your employer's plan will almost always only cover you for your regular job for a period of two years.   After two years, you will lose your disability coverage if you are deemed capable of doing any job that pays at least 50% of your salary.    This can occur even if you do not find a job.

Personal Disability Coverage (Canada Life, RBC Insurance, and Manulife) provided through licensed insurance agents 

Disability Policies insure you biggest asset which is your health and the ability to earn income.   You apply for for and qualify for DI policies based on stable employment and good health.    You must provide evidence of regular employment income and of good health.   As part of the application, you will answer questions concerning your medical history and lifestyle.    You will be qualified at the time of application by insurance underwriters both financially and medically before a policy is offered to you.    If you qualify, you may received guaranteed benefits and premium cost for the life of the policy or to age 65. 

As personal Disability Policies pay out tax free on claim, your coverage is limited to about two thirds of your gross income.   Waiting periods can be selected to start coverage after 120 days when your Employment Insurance coverage expires or earlier if desired.   A key difference from group disability coverage, is personal disability coverage offers the option of coverage protection for your own or regular job.    In this situation, you do not have to accept retraining for a job that may pay a lot less money.   If you are unable to perform the major duties of your regular job, you will be paid the monthly benefit.   When you have "Own Job" coverage and cannot perform your own job you will be paid benefits even if you find a different type of employment. 

Personal Critical Illness Coverage (Canada Life, RBC, Sun Life, Desjardins, and Manulife) provided through licensed insurance agents

These are policies that you apply for and qualify for based on your health and immediate family medical history.   You do not need any form of income to qualify for Critical Illness coverage.   You will be qualified at the time of application by insurance underwriters based on the medical information supplied.

Without going into all the variations, if you are diagnosed with any of the covered illnesses and survive for 30 days after diagnoses, the total amount of coverage will be paid out to you.   The tax free cash payout is yours to spend.   You may spend it on a family vacation if you want.   The value is that in the majority of cases people survive serious illnesses.   However, they often challenged by expenses and by loss of employment income at the same time.     Receiving a  payment when coping with serious illness relieves stress and helps your recovery.

Life Insurance

Life insurance is a financial tool that creates a pool of capital during an individual’s lifetime or when an individual passes away.  That pool of capital can be accessed by the policy owner, or can be passed on to another individual or individuals (beneficiaries).  The pool of capital created on the death of the insured may be used to retire debt for the survivor, or create an income stream for survivors, or perhaps pay final expenses to keep existing assets intact.

The “individual” (beneficiary) receiving the funds could also be a corporation.  The funds created on death may be used to retire corporate debt or to create a supply of capital required to allow the business to continue operations.  The Insurance proceeds can help fund buy/sell requirements and allow for the smooth continuation of a business.

Life Insurance Types

          Term life insurance         Whole life insurance         Universal life insurance         Variable or Participating life insurance         Variable universal life insurance

          Simplified issue life insurance         Guaranteed issue life insurance         Final expense insurance         Group Life Insurance.

  For More Information on Types of Insurance

     https://www.canadalife.com/insurance/life-insurance.html

Bank Mortgage Insurance Coverage 

You should be aware that there are significant differences in the Life and Critical Illness Insurance offered by banks at the time of signing up for a mortgage.  The bank owns the mortgage insurance and is the beneficiary, not you or your family.   This mortgage insurance is sold by bank staff who do not hold insurance licenses and the insurance is not medically underwritten until the time of claim.   Because the bank defers review of your medical information until the time of claim, there is a risk that the bank will deny your claim at the time of death or serious illness.   Also, bank owned insurance is often significantly more costly than owning your own insurance.   

Note 

The above is a concise overview of protection available.   You should check the relevant government web sites and speak with a financial advisor to ensure you have complete and current information.