There is a type of insurance that’s painfully underrated. I’ve never understood why. It can save your life – or at least your lifestyle. It’s Disability Insurance. What is Disability Insurance? Well, we’re going to cover that in the short video below!
Disability Insurance replaces a portion of your income if you’re too hurt or sick to work.
It gives you the ability to keep paying your bills so you can focus on your recovery. Maybe you’re able to use WorkSafe or Employment Insurance. Just remember, they only pay in certain circumstances and/or for certain periods of time. If you’re self-employed or working a side hustle and not sure what you qualify for, read these 2 blog posts: What If I Get Hurt At My Side Hustle? | Government Benefits for Self-Employed Canadians
With a plan like the one we walked through in the video above, Sam was able to fully recover and didn’t have to stress about paying her bills or have increased debt. Having an emergency fund to supplement her Employment Insurance and extending her personal disability insurance waiting period, so that the benefit starts later, made the insurance premium much more affordable.
Disability Insurance is a very flexible product. You can customize when it starts paying you, for how long, and how much.
You can also choose whether you’re covered for accidents, sicknesses or both.
Accident coverage is a simple concept – it will pay you if you can’t work because of an accident. Sickness coverage, on the other hand, is more robust.
Sickness coverage can replace your income from serious illnesses like cancer or other internal pains like muscle wear-and-tear.
Getting both accident and sickness coverage can cover you from *almost all angles.
What Disability Insurance doesn’t cover is medical expenses and long-term care. Those are 2 separate types of insurance.
The benefits of disability insurance shouldn’t be underestimated.
Here’s an example:
Let’s say Sam is 30 years old and makes $50,000 a year as a bookkeeper. The accident was much worse than a concussion and Sam will never be able to work again.
We’re going to make this fair and compare her after-tax income of $39,586.
Assuming Sam works the same job until she’s 65 years old and never gets a raise:
$39,586 X 35 years = $1,385,510
If Sam qualified for the CPP Disability benefit (permanently disabled or likely to die from the condition) and received the average $1001.15 per month benefit:
$1001.15 X 12 months = $12,013.80 X 35 years = $420,483
Let’s minus her CPP benefit from the income she’s missing out on:
$1,385,510 lost wages – $420,483 CPP Benefit = $965,027.00
That means that in the BEST CASE SCENARIO, Sam would lose $965,027.00 in income. And that’s if she never made more than she does right now.
If Sam doesn’t qualify for CPP disability and again, never gets a raise, she’ll lose out on
But Sam still needs to pay for her living expenses and might need to pay for medications or disability support now, too.
That’s why we believe that disability insurance is painfully underrated.
Remember, you are in control of your financial future. Plans like this can play a crucial role in securing your family’s lifestyle.
It takes time and effort to put in plans like this, but it’s worth it to know your family will be taken care of.
*Each policy is different. There are exclusions in all insurance policies.