If an injury or illness kept you off work for a year, how would the mortgage get paid? EI sickness benefits last up to 26 weeks and replace only part of your pay. Disability insurance pays a monthly, usually tax-free benefit until you can work again, for as long as the policy's benefit period runs.
Three details, and we'll come back with options from several insurers.
Disability insurance pays you a monthly benefit if illness or injury stops you from working. Benefits from a policy you pay for yourself are generally tax-free. The price depends on your occupation, income, the waiting period before benefits start, and how long benefits can last. EI sickness benefits in Canada last up to 26 weeks, so private cover protects you beyond that.
Most people insure their car, their house and their life, but not the thing that pays for all of them: their ability to earn. A back injury, a heart problem or a mental health condition can keep someone off work for months.
Employment Insurance helps for a while. EI sickness benefits pay up to 26 weeks, at a percentage of your earnings up to a weekly maximum. Self-employed people only get EI if they've registered and paid into it. Workplace long-term disability, if you have it, often stops when you change jobs, and the benefit is taxable if your employer paid the premium.
A personal disability policy goes with you from job to job. It's priced on your occupation and income, and it pays a set monthly amount while you can't work.
Raj, 38, drives a truck and earns about $5,500 a month. A shoulder injury needs surgery and nine months of recovery. EI sickness covers the first 26 weeks at part of his pay. With a disability policy that has a 90-day waiting period, his monthly benefit starts in month four and continues until he's back on the road.
Enter your monthly costs and emergency savings. See how long you'd manage without income, and what a disability benefit would change.
A simple budgeting illustration that leaves out EI and tax. Insurers limit benefits to a share of your income.
Insurers cap it at a share of your income. Aim to cover the bills you must pay (housing, food, loans), not every expense.
The days before benefits start: often 30, 60, 90 or 120. A longer wait lowers the premium if your savings or EI can cover the gap.
How long benefits can last: 2 years, 5 years or to age 65. Longer is more expensive and much more protective.
"Own occupation" pays if you can't do your job. "Any occupation" only pays if you can't do any reasonable job. This matters most for professionals.
Office work costs less to insure than physical trades. You can't change it, but it explains price differences between quotes.
Partial disability, cost-of-living increases, future purchase options and return of premium are common add-ons. Each adds cost.
It depends mainly on your occupation, age, the monthly benefit, the waiting period and the benefit period. Plans can range from a small monthly amount for basic accident cover to several hundred dollars a month for a professional's own-occupation policy.
If you pay the premiums yourself with after-tax money, the benefits are generally tax-free. If your employer pays the premiums, benefits from that plan are usually taxable.
Up to 26 weeks, paying a percentage of your insurable earnings up to a weekly maximum. Self-employed people need to have registered for EI special benefits to qualify.
Yes. Insurers usually look at your net business income over the last couple of years to set the maximum benefit. Some plans also cover business overhead expenses.
Disability pays a monthly income while you can't work, for any covered illness or injury. Critical illness pays one lump sum when you're diagnosed with a listed condition, whether or not you can work. Many people have both.
Check three things: the monthly maximum, whether benefits are taxable, and what happens if you leave the job. Many people top up a group plan with a personal policy that stays with them.
Pankaj is a licensed insurance advisor and a member of Advocis. He helps employees, trades and business owners compare disability and critical illness cover from several Canadian insurers.
Tell us your occupation and income. We'll compare disability plans and explain the definitions in plain words.
