What is Long Term Disability Insurance?
Have you ever witnessed someone close to you, such as a friend or family member, experience an illness or injury that prevented them from working for an extended period of time? Witnessing someone suffer financially due to loss of income can be tough, especially if it’s someone close to you or even yourself. Long Term Disability Insurance can provide a financial safety net in these situations.
While your home, vehicle, and retirement fund are valuable assets, your ability to earn a living is your most important asset. Disability benefits can cover a significant portion of lost wages if you are unable to work for an extended period due to illness or injury. However, if you have a pre-existing condition or are older, you may face higher premiums or even denial of coverage.
Disability Insurance doesn’t only cover uncommon incidents, but also common health issues such as physical injuries, stress, cardiac arrest, and cancer that may require you to take time off work.
So, what is Long Term Disability Insurance Disability Insurance? It is a policy that helps you financially if you become disabled and unable to work. Your employer may offer Group Insurance disability benefits, but even if you have a sedentary desk job, the likelihood of missing work due to illness or injury is not improbable, especially given the prevalence of stress and illness in office environments.
Types of Disability Insurance
Short-Term Disability Insurance
Short-term Disability Insurance, as the name suggests, is meant for short-term situations, typically lasting for a maximum of 16 or 17 weeks. It usually involves a brief waiting period, sometimes as little as one or two weeks, before benefits begin.
Another option for those who want to prepare for a short-term disability is to set up their own emergency fund. This would involve saving up three to six months’ worth of living expenses to cover any unexpected short-term disability. If you were to get sick or injured and had to take time off work, this emergency fund could help you stay afloat until you recovered and could return to work.
Long-Term Disability Insurance
There are two primary types of Disability Insurance: Short-term Disability Insurance and Long term Disability Insurance. Both programs provide a percentage of your monthly basic pay up to a maximum of ⅔ of your income during incapacity. Some carriers may even provide additional services, such as training to re-enter the workforce, after being on claim for an extended period of time.
If you are looking for a disability insurance plan, it is essential to consider a Long term Disability policy (LTD). The benefit period for LTD is two years, five years, or until age 65, and some carriers may provide coverage and pay Tax-Free disability benefits past the age of 65. If you take out your own insurance, the coverage will follow you from one employment to the next. As the name suggests, Long-term Disability Insurance is long-term in nature, and it has a longer waiting period before benefits commence, which may be 30 days, 60 days, 90 days, 120 days, or longer.
Investing in Long term Disability Insurance is a vital aspect of securing your financial future. To protect yourself from long-term income loss, it is recommended to purchase coverage for at least five years or more.
Benefits of Disability Insurance in Canada.
The Covid-19 pandemic has made us all realize how crucial it is to have a safety net in place to protect our finances in times of crisis. The Canadian government stepped in during lockdowns and provided income benefits like CERB, which many families relied on to make ends meet. Disability benefits work in the same way, offering financial support if you are unable to work due to injury or illness.
While many people have health insurance to cover medical expenses, they often overlook the need to prepare for the possibility of being unable to work. Disability insurance can help mitigate the risk of financial catastrophe by providing coverage for living expenses during a period of lost income. It’s like Employment Insurance, but specifically designed to protect against loss of income due to disability. It offers continuous sick leave benefits for you and your household, regardless of age or working conditions.
Disability insurance is not just for individuals, but for business owners and self-employed individuals as well. It’s a critical risk management tool that can help replace key employees and prevent severe hardship to the business. Losing a key employee can put stress on the business and banking relationships, but a disability policy can offer peace of mind and financial protection.
In conclusion, Disability Insurance is an essential coverage that everyone should consider. Whether you’re an employee, self-employed, or a business owner, it’s important to prepare for the unexpected and ensure that you have a safety net in place to protect your finances in times of crisis.
Why is Experior Financial the best option?
Disability Insurance rates depend on various factors such as the type of policy, the waiting period, duration of coverage, age, and health status. If you opt for a non-cancellable policy, the insurance company cannot cancel your coverage even if your health condition changes.
At our company, we prioritize our clients’ well-being and understand the significance of Disability Insurance benefits in the event of sickness or injury. Our team of experts is committed to finding the best policy for our clients by comparing quotes from multiple insurance companies. We work diligently to ensure our clients get the most suitable Disability Insurance coverage at the most competitive rates.
FAQ
Are you wondering if you can buy Disability Insurance privately?
The answer is yes! For instance, Short-term Disability Insurance can be purchased privately instead of through your employer under group coverage. In addition, Individual Disability Insurance is a great option for individuals who don’t have access to disability coverage through their employer, especially middle to high income earners looking for tax-free increased benefits. Contact a life insurance broker or an independent agency such as Experior Financial Group to learn more.
There are various kinds of Disability Insurance policy benefits. The most common are benefits based on income, regardless of whether you are employed or self-employed. This type of coverage requires a certain number of working hours. Another type of coverage does not depend on income, and can be part of a life insurance policy that provides coverage for debt payment, mortgage, or total credit card payments. Disability riders can be purchased as options to add this coverage at the time of application.
What is the most affordable way to get Disability Insurance?
If you’re looking for an affordable way to get Disability Insurance, the cost typically ranges between 1 and 3 percent of your gross income. Disability Insurance can provide you with enough money until you are fully recovered and back to work if you experience a loss of income due to a disability. For most people, Disability Insurance ends up being a very good investment. To make Disability Insurance more affordable for you, you can shop around for different plans, purchase less coverage features, get disability insurance through your employer, and improve your health. Or you can purchase a plan that contains a return of premium option if you don’t make a claim.
Is Disability Insurance worth getting?
Absolutely! Disability Insurance coverage doesn’t have to be expensive, and if you become ill or disabled and lose your job, it can be a lifeline of revenue. Disability benefits pay out if small business owners are unable to work as a result of illness or accident sustained during the job. In this situation, it functions as income replacement, collected as monthly income. Disability benefits are received tax-free.
Is group disability coverage tax-free in Canada?
Group Disability coverage in Canada is generally not taxed if designed correctly by your employer. Company-paid expenses for Group Insurance plans are deductible as business expenses by the company and will not usually result in a taxable benefit to the employee.