Disability Insurance

What is a Disability Insurance?

Disability insurance is a type of insurance that provides financial protection in the event of an unexpected illness or accident that prevents you from earning an income. Typically, disability insurance replaces a portion of your regular income, usually between 60% and 85%, for a set period of time if you become temporarily unable to work due to an injury or illness. If you become permanently disabled, meaning the disability is severe enough to prevent you from ever returning to work, you may also be eligible for benefits, although this does not necessarily mean that you will receive benefits for the rest of your life. Disability insurance policies can be obtained through many companies, or you can work with a life and health insurance agent to find a policy that meets your needs. If you are self-employed, you may also consider obtaining disability insurance to cover your business expenses in the event that you are unable to work.

Short-term disability insurance

Short-term disability insurance typically provides benefits for a period of up to six months if you become ill or injured and are unable to work. If your employer offers a short-term disability plan, you will need to file a claim through that plan. Paid sick leave is not a requirement for employers and policies vary from one company to another. You should speak with your employer’s human resources department to learn more about your specific plan, including any applicable sick leave or vacation policies. If you do not have short-term disability coverage and your employer does not provide it, you may be eligible for sickness benefits through Employment Insurance (EI). To qualify for EI sickness benefits, you must have used up all of your sick leave and worked a sufficient number of hours.

Long-term disability insurance

Long-term disability insurance is designed to provide income replacement for an extended period of time, typically after short-term disability benefits, employer-provided sick leave, and Employment Insurance (EI) benefits are no longer available. The amount of income replacement varies by plan but usually ranges from 60% to 70% of your pre-disability income. The specific terms of the plan may also differ, with some providing benefits for up to two years if you are unable to return to your previous job, and others offering coverage if you are unable to work in any job beyond the two-year mark. It’s important to carefully review the terms and conditions of any long-term disability insurance plan to fully understand your coverage.