Everybody wants some assurance that if the worst happens, they are protected. And that is what disability insurance is for. Disability insurance is a crucial way to ensure you and your family stay safe even if someone is badly injured and cannot work. Read on for a basic guide about how disability works here in Canada.
What is disability insurance?
Disability insurance is designed to cover your expenses in the event that you are injured. This insurance does not cover medical expenses or, say, repairs to a damaged car. It is designed to cover your normal living expenses while you are unable to work. This can include rent or mortgage, food and utilities, and gas. Most disability insurance is classified as either short-term or long-term.
Short-term disability benefits are only available for six months after an illness or injury. These types of plans typically pay around 60 percent to 85 percent of your expenses during this period. Some employers offer this type of insurance, so it is important to find out whether your employer does and what you have to do to remain eligible.
Long-term disability insurance is available once your short-term benefits run out and you have used up all available sick leave. Once that happens, most long-term plans typically pay for up to two years and give you between 60 percent and 70 percent of your income. After two years, you typically must prove that you are unable to work any job at all in order to continue to receive benefits.
What happens if the insurance company does not pay?
Unfortunately, it is not unknown for disability insurance providers deny coverage for some reason. While there are many ethical insurance companies out there, there can be confusion in individual cases, and it can take time for everything to get sorted out. It is also possible to run into an unethical company that won’t pay what is owed.
In this situation, it is always a good idea to speak with disability lawyers who can help you go over the fine print of your insurance agreement and get the benefits you are entitled to.
What if I do not have insurance or am waiting for a case?
There are options if you do not have disability insurance or if you are prosecuting a case for benefits and need money while you wait. You may be eligible for the Canada Pension Plan.
This plan sends a monthly payment to people who have contributed to it but are no longer able to work. In order to qualify for the Canada Pension Plan, you must be able to show that your injuries meet the criteria of being both “prolonged” and also “severe.”
Prolonged injury means that there is no estimated date when you will be fully recovered, and you will likely be disabled for the rest of your life. Severe injury means that you are so physically or mentally disabled that you are unable to get any gainful employment.
What else should I know?
If you have an income source of some kind — from another insurance plan, for example — these are typically deducted from any disability insurance you are eligible to receive. Most long-term plans immediately reduce benefits as soon as income starts coming in, even if that income is much less than you previously made.
It is also important to know that you may have to pay taxes on your disability income. If you paid the entire disability insurance premium yourself, you do not have to pay taxes on it. If your employer paid a part or all of it, you will have to pay taxes.
Disability insurance is a great way to keep your family safe. Be sure to get insurance if your employer does not provide it, and if you have issues with accessing your benefits, get the advice of a lawyer about how to proceed.