It is important to understand what protection you have if there is a sudden unplanned disruption in your ability to earn an income. According to the Canadian Life and Health Insurance Association, one in three Canadians, on average, will be disabled for 90 days or more at least once before they reach age 65. Consider a situation where a carpenter breaks a leg skiing and is unable to work or where chemotherapy treatments have made it impossible for a self-employed manager to run their business. Emergencies likes these are always unexpected so whether it’s a short or long-term disruption in income, being prepared is always a good idea.
Common reasons to review your disability insurance coverage include:
- You rely on income from a personally owned business
Disability insurance is crucial for individuals who are self-employed. Disability insurance will help provide a steady income and keep your business running by covering ongoing business expenses while you are unable to work due to an illness or injury. There is a lot at stake if you own your own business – you need to consider both your personal and business income, business expenses, partners or employees and any financial obligations you continue to have. There are many product options available and it is important to discuss with a financial professional what is appropriate for your business.
2. You don’t have the coverage you need from your employer
Many employers provide disability coverage in the event you are unable to work due to illness or an accident but it is not always enough or the right type of coverage. Do your research into your group coverage plan, review the plan with a financial professional and ensure your family will be provided for based on your needs. You may be able to top up a group policy with an individual policy if you are not adequately covered. One additional benefit of an individually owned disability policy is that is not contingent on employment with a specific company so if you change jobs or companies, you’ll still have coverage.
3. You are the main financial provider for your family
If your family relies heavily on your role as the main income provider, it is up to you to ensure your income is replaced in the event you are unable to work. There are circumstances where group coverage does not provide adequate coverage; some plans do not replace income from bonuses or sales commissions or account for income you are drawing from a business in the form of dividends instead of salary.
The two most common types of disability insurance are group and individual. Group insurance is arranged by an employer, association or union to help financially protect its employees/members. It focuses on general coverage for all employees/members.
Individually or business owned disability insurance generally provides more control and choice to help you financially protect what matters most. It’s you-centric: you own it and you choose the product and options to best suit your needs.
Together or on their own, individual or group disability insurance can help protect you, your family and your lifestyle should the unexpected happen. If your employer does not offer group insurance with disability coverage, or if you are self-employed and/or a business owner, you should consider individual disability insurance.
If you have any questions about your current insurance plans or finding a financial advisor to work with you to develop your financial plan, connect with us.