Disability Insurance

The chances of becoming sick or injured so that you will be unable to work are about three times greater than the chance that you will die prematurely. You would therefore think that everyone would have disability insurance instead of life insurance. However, more life insurance policies are sold because it costs less and the need is perceived to be greater.

The purpose of disability insurance is to provide an income if you are no longer able to work. If an individual becomes disabled, certain expenses still exist. Mortgage payments have to be made. Car payments and car insurance have to be paid. Education costs for children continue, in addition to household expenses. You may also find you have extra costs, such as drugs, medical care or perhaps a specially equipped vehicle. Disability can be very expensive.

Disability insurance exists to pay these bills. It is paid as a monthly income, and typically, the amount you receive from a disability income insurance policy will be about 60% of your salary. Disability insurance does not allow you to be insured for, say, 90% or 100% of your salary. Its intent is very clear in that it exists to help you during a time of illness but not to reward you for being off the job.

Disability insurance is one of the most complicated insurance products.

Individuals should be familiar with the coverage they have. Families and individuals should discuss their insurance needs with an experienced life insurance agent.

Disability insurance is also provided by the Canada Pension Plan/Quebec Pension Plan for both the contributor to the plan and the children of the contributor.

The contributor must apply in writing and must have made enough CPP/QPP contributions in at least four of the past six years, or three of the past six years if contributions have been made for at least 25 years. A decision will be made for the most part within four months as to whether you qualify for benefits. It then it takes another four months for the first payment to be received. Your disability must be proven to be severe and prolonged in order to qualify. Those with terminal illnesses receive a decision within 48 hours of application, and benefit payments begin immediately.

A child of a disabled contributor will qualify for benefits if younger than 18 or between 18 and 25 and in school or university full time. There is no benefit for the spouse of a disabled contributor.

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