When you're not able to earn income, who will?

If you become disabled, you will experience a dip in your earned income and an increase in your expenses.

Most employed Canadians have disability insurance coverage through their group plan with their employer. However, the terms of these group plans are as follows:

• may not be sufficient to meet your income needs
• not portable to your new employer
• lost with employee status
• benefit decrease after 2 yr commencement period
• will it pay out when you cannot perform your "own occupation" or "any occupation"?

If the policy is "any occupation" you will receive disability benefits only if you are unable to perform any job within the same pay range. For highly trained professionals, it may be beneficial to obtain "own occupation" via a private plan, so that you are not forced to take on unsatisfying type of work. "Own occupation" policies are generally more expensive than "any occupation".

• elimination period may be 6 months. Do you have an emergency fund for 6 months to cover your expenses during this time of no earned income?
• some policies penalize you when you return to work for a shorter time period or part time. Private policies are structured differently, thus allowing you to take advantage of full benefits.
• group plan might not have "common forms" of mental illness included in their plans
• Group plan generally does not cover overtime, bonuses, profit sharing - so replacement income will be way below your expectation
• If you are incorporated, ensure that all of your billings are insured, not just your salary

You may be willing to pay for these options:

1. to have a guaranteed renewable and non-cancellable policy so that it cannot be cancelled and must be renewed without a medical exam. Group plan cannot do this for you. In addition, the premiums will remain constant throughout; unlike in group plan where premium costs are always increasing.
2. A waiver of premium option - to not have to pay any premiums while on disability
3. a cost of living allowance - for your benefit to increase with the rise of inflation
4. A refund of premiums option allows you to receive a refund of all of your premiums at a certain date, assuming there was no claim.
5. Payments are generally not taxable
6. Policy can be personally or corporately owned.

Please note: When you purchase a private policy while yo are a member of a group plan, the benefit you receive from the group policy may reduce the private policy benefit.

Do you know if cases of disabled persons in Canada has been increasing or decreasing? Lets discuss :-).