Protect your paycheque
Disability insurance works when you can’t. It can give you tax-free monthly income to help pay expenses if an illness or accident stops you from working.
What is disability insurance?
It can give you a tax-free monthly payment to help replace your income and cover your expenses if an illness or injury keeps you from working.
While a disability can often be visible to the naked eye, not all disabilities are so easily recognized. Chronic pain or a mental health issue can also qualify as a disability.
How does it work?
- Choose the amount you want and add optional benefits to customize your coverage.
- Pay your monthly premium.
- File a claim if you become disabled.
- Receive your monthly payments when the waiting period ends. The waiting period is the number of days from the date you’re disabled until the benefit start date.
- Your payments stop when your benefit period ends or you return to work.
Why do you need disability insurance?
It’s more common than you think Up to 40% of Canadians become disabled for 90 days or longer before age 65.
Replaces most of your paycheque Potentially receive up to 80-90% of your take home pay.
Protect your retirement savings Disability insurance can help you meet your financial obligations so you may be able to avoid dipping into your retirement savings.
Protect your most valuable asset
Your ability to earn an income over a 30- or 40-year career, is your most valuable asset. Here’s an idea of what you could earn over the rest of your working life based on your age and current salary. This chart assumes a 2.5% raise every year and that you’re working to age 65.
How much does it cost?
Premiums often range from 1-9% of your salary, but each case is different. Here are some factors that can affect cost:
How much income can you get?
The following chart shows the maximum amount you could receive tax-free each month if you faced a disability. These are just estimates – the amount you’d actually receive depends on specific circumstances, like your age and occupation.
What does the government give you?
You can get disability coverage through the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) but they provide limited benefits.
Strict definition You must “have a severe and prolonged mental or physical disability” to qualify for CPP disability benefits. You may be able to get disability coverage through Canada Life under a more relaxed definition.
Lower monthly benefit The CPP’s average monthly benefit is $966.43 and the maximum in 2019 is $1,362.30.
Do you need disability insurance if you have it through your employer?
Group insurance is a great start, but it usually only provides basic coverage. A personal disability policy complements group insurance – together, they can help protect you, your family and your lifestyle should the worst happen.