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The 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.

Group policies
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 disability.

Group plans also generally terminate when you leave an employer for any reason. This can be a major cause of concern for many Canadians.

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.

Questions to ask your
insurance advisor:
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?
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.

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),

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