Companion Advisor: Insurance
Disability insurance a necessity
One of the great fears for anyone is suddenly being
disabled in some way and unable to continue regular work or activity.
Coupled with that is concern about no longer having an income to meet
ongoing expenses and the impact of this loss on dependents.
Disability strikes far more frequently than premature
death. Temporary or long-term disability can happen at any age. It can
come suddenly from an accident, or severe mental or physical illness,
or develop over time. A third of all people now aged 35 will be unable
to work for at least six months before reaching age 65.
Protect yourself with adequate insurance
Having adequate disability insurance is crucial. It can mean the difference
between the devastation of a family and maintaining its lifestyle, or
between low-income future employment and having the funds needed to prepare
for a new career. Adequate disability insurance should be part of your
financial plans, for yourself and for your family.
Close to eight million Canadians have disability insurance coverage through
group plans, often through work however, many people are not covered adequately
and some are not covered at all. There are also various types of limitations
in group policies. The plan may pay only a percentage of your gross salary,
or it may have a maximum pay-out that is inadequate to meet your needs.
It may also only cover your inability to performs "any" work rather than
your "own occupation" or it may have a restrictive definition for partial
Group plans also generally terminate when you leave
an employer for any reason. This can be a major cause of concern for many
Some employers offer "top-up" disability insurance
policies to add to the standard coverage provided in most group policies.
These are suitable for those who need more extensive coverage, however
you should check more closely to determine how a top-up policy would merge
with your group plan.
Insurance for self-employed Canadians
More than 2.5 million Canadians, more than 17 per cent of the total workforce,
are now self-employed and that number is growing rapidly. Provincial Worker'
Compensation programs or the federal Employment Insurance program provide
basic disability coverage, however these plans provide only limited coverage,
with income too low for most people. Most self-employed people need additional
income protection insurance. It is often difficult and expensive for older
self-employed persons to obtain individual disability insurance. It's
obviously better to buy such a policy when you are younger.
Some policies will consider you to be disabled only
if you are unable to work at any job, for which you are qualified by education,
training or experience. This is an "any occupation" definition. The least
comprehensive policies cover only in the event of "total disability", defined
as the inability to work at any job at all.
to ask your
|How does the insurance company
define a disability?
|Is the policy guaranteed renewable?
|If I become disabled, how long
are benefits payable?
|How much of my current salary
will the policy pay?
|How can I increase my coverage?
What is a disability?
One of the most important considerations in choosing your policy will be
how the policy defines a "disability". The best policies, and the more expensive
ones, offer "own occupation" or "regular occupation" coverage. In these
policies, disability is defined as the inability to perform the duties of
your usual job. People in professions demanding special education or experience
should look for this type of policy.
Some disability policies will pay benefits
whether your disability arises from an accident or illness. Some will protect
you only from injuries and not illness. Check that you are covered both
on the job and in your leisure hours. Many self-employed people run into
affordability problems, as the policies become more expensive as they become
more comprehensive. Your Fiscal Agents insurance advisor can help you find
a policy that will protect you and your family adequately.
This article is
reprinted with permission from the Canadian Association of Insurance and
Financial Advisors (CAIFA), www.caifa.com.
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