Insurance that helps ease financial difficulties 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 the concern they will no longer have an income to meet ongoing expenses and the impact of this loss on their dependents.

Disability strikes far more frequently than premature death — a key reason for buying life insurance.

Temporary or long-term disability can happen at any age. It can come suddenly from an accident, or over time as a result of a severe mental or physical illness. Most people have some form of disability insurance through a group plan at their work. However, many people are not covered adequately and some are not covered at all.

The value of adequate disability insurance cannot be underestimated. It can mean the difference between the devastation of a family compared to maintaining their lifestyle, or between low-income future employment
compared to having the funds needed to prepare for a new career.

Adequate disability insurance should be a part of everybody's financial plans for themselves and their families.

Close to eight million Canadians have disability insurance coverage through group plans. However, there can be various types of limitations in those policies. The plan may pay only a percentage of your gross salary, or it may have a maximum payout that is inadequate to meet your needs. It may also only cover your ability to perform "any" work rather than your "own occupation," or have a restrictive definition for partial disability.

Group plans also generally terminate when you leave an employer for any reason. In this period of unstable employment, this can be a major consideration and a cause of concern for many Canadians.

Don't leave your family without protection.

There's a trend now to obtain "top-up" disability insurance policies to add to the standard coverage provided in most group policies. However, you should check closely to determine how a top-up policy would affect or merge with your group plan.

More than two million Canadians, close to 16 per cent of the total workforce, are now self- employed, and that number is growing rapidly. Some may be covered by basic disability insurance through either a provincial workers' compensation program or the federal employment insurance program. However, these plans provide only limited coverage. Most self-employed people need additional income protection insurance and it appears that many have not purchased any.

Delaying the decision can be costly.

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.

Your life insurance agent or broker can help you develop a financial needs analysis which can assist you in deciding what additional disability insurance you may need to maintain the standard of living to which you and your family have become accustomed.

 

Prepared by the Financial Advisors Association of Canada, 350 Bloor Street East 2nd Floor, Toronto, ON, M4W 3W8