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Disability Happens In A Flash

 There's a reason there's 91,386 doctors and specialists in Canada and 797 funeral homes. Disability insurance is paycheque protection. Get disability insurance quotes to protect your income.

How Much Is Your Income Worth To You?

Disability insurance replaces your income and protects your lifestyle in the event you get sick or hurt.

Your income or salary provides for the lifestyle you currently live. What would happen if your income were cut down or stopped suddenly? How long could you go without your income?

Employer Workplace Disability Insurance Facts

How Does A Workplace Disability Insurance Plan Work?

If you're like most workers in Canada that work for small companies, your workplace Group Benefits likely do not have disability insurance. With good reason - it's expensive and the main reason why companies are forced to cancel the whole Group Benefits Plan.

If you have disability insurance through work, you might not realize that it's typically good for 4 months. After that you are basically taken off the plan with a requirement to return to work or find ANY suitable employment. In addition there is a cap on your benefits the higher your income.

Note: because in most cases your employer pays for the disability insurance, whatever benefits you will receive are before taxes. So your benefits pay 60% of your income. After tax it comes to about 40% of your gross income. Can you survive on that? For how long? 

There's a reason why personal injury law is a lucrative business. A big portion of their income comes from fighting on behalf of employees who were denied long term disability (LTD) benefits or taken off claim from their workplace disability insurance.

When was the last time you read the long term disability (LTD) clauses of your employee benefits booklet?

Employee group benefits disability insurance

Things to know when you make a disability claim through your employer group disability plan. Plans depend on your company booklet. Here are general guidelines.

Disability insurance Canada
  • You either have short term or long term disability or both. 
  • Short term disability (STD) will provide you coverage right away for about 4-6 months.
  • Long term disability (LTD) pays after a defined waiting period and will pay for about 2 years.
  • You'll get 60 - 85% of your after-tax monthly income. Higher your income, less benefit.
  • Usually a cap on how much you can claim based on income especially if you make over $100K. 
  • Your policy booklet will also tell you how long you will receive these benefits for.
  • You will pay tax on your benefits if your employer pays for your plan.

The Problem

  • Your income is more than $100,000 a year meaning your benefits are capped.
  • Bonus and commissions make a big part of your compensation and not covered as part of income.
  • You will likely change jobs in the future and can't take your disability to new employer.
  • You need more than 40% of your income to support your lifestyle if you can't work.
  • You need long term disability insurance to last for longer than 4 - 24 months.
  • Your employer could in the future remove your long term disability (LTD) insurance.

The Solution

  • You can top-up and supplement your income for the amount above $100,000 not covered.
  • You can buy a private disability plan that protects your bonus and commission income.
  • Your private disability insurance plan is portable regardless of where you work.
  • Private disability insurance is tax-free and helps to make you "whole" as much as possible.
  • Most private disability insurance plans last until age 70 or for life.
  • Your private disability insurance plan can never be changed or cancelled by insurance company.

The Global COVID-19 Pandemic Was A Loss of Income Dry Run

If you were anxious that you might lose a job due to the pandemic lockdowns you realized right away that it would mean a loss of income. 


If you know someone who got COVID-19 and couldn't work for a while and lost income, this is exactly what it's like to have your income stop or be cut down immediately. 

Disability Insurance By Profession

  • company employee

  • lawyer

  • it professional

  • business owner

  • executive

  • designer

  • sales professional

  • consultant

  • physician

  • construction

  • engineer

  • management

  • dentist

Professional working in a company

Your group employee disability insurance plan is exactly that...a plan that groups you together with every other employee or executive in the firm. It pays no respect to your own personal health, occupation and risks. It's only focused on the group as a whole such as the claims and number of people and how your company structures the plan. If you make typically more than $100,000 in income your benefit is capped so you're "penalized" for being a high earner. If you want coverage that will ensure you are covered for as long as you are disabled and unable to work, your workplace plan on average will pay for as long as 2 years. 

Do you depend on commissions and bonuses for your income? Your group plan will cover $0 of this. If disability claims made within the group become too expensive for the life insurance company, it means your overall employee benefit costs will rise for the company. This will mean they choose to cancel the disability plan the next year leaving you with no coverage. The best way to avoid this and feel secure that your income is protected, is getting an individual disability insurance policy that won't change or be cancelled unless you do.

"Disability Won't Happen To Me!"

Main causes of disability insurance claims in Canada

This is what most people picture when they think of a "disability". Because they don't encounter it in their life or those close to them it's hard to see that this is one part of a disability. Most disability insurance claims in Canada are illness and sickness related. Less than 10% are related to sports injuries or car accidents that lead to a wheelchair!

Long term disability insurance claims Canada
Workplace disability insurance benefits
  • You pay taxes on group plan disability benefits.
  • On average if you make more than $100,000 you take a 40% pay cut if you make a claim...before taxes!
  • Commissions and bonuses are not covered by a group plan.

"Employee Benefits Will Cover Me!"

Nowadays most group plans don't have disability insurance. Why? Because it's expensive especially if a few people make long term disability claims that will cost the insurance company a lot of money to cover. Which would mean higher costs for the overall plan. Plus, if you do have a group plan with disability coverage most of them are paid for by the employer. What this means is that you pay taxes on your disability benefits so instead of getting 80% of your income you get 60%. The best solution is to top-up to get a private individual disability insurance plan. You can take it even if you leave your job.

Disability insurance benefits

"I have enough savings and can depend on my family or bank"

  • How many banks will lend to someone with no prospect of future income?
  • On average it takes 6 months before people outspend their savings.
  • Covid-19 was a "dry-run" to test how long people can go without an income.
  • Once you use your savings what happens to retirement?
  • If your disability is for life what happens when savings run out? Max your credit?
disability insurance savings

Real Examples of Causes of Disability By Age & Occupation

Many people think they’re “immune” from the possibility of becoming disabled. Here is a list of actual claims as submitted by insurance companies' disability insurance claim files. What could possibly prevent you from being able to work? Curious about what type of disability affects your profession? Get in touch with Blue Alpha Wealth.

Cause of Disability

Occupation

Age

Multiple Trauma-Accident

President – Construction Company

38

Cerebral Aneurysm

Psychiatrist

55

Cancer of Lung

General Sales Manager

48

Degenerative Disc Disease

Veterinarian

54

Uncontrolled Diabetes

Lawyer

31

Lumbar Laminectomies

Emergency Physician

42

Coronary Artery Disease, Angina

Accountant

55

Neurotic Depression

Insurance Broker

35

Cervical and Lumbar Back Sprain

Advertising Consultant

34

Severe Coronary Artery Disease

Ophthalmologist

58

Cause of Disability

Occupation

Age

Carcinoma Lung

Orthopaedic Surgeon

60

Lou Gehrig’s Disease (ALS)

Dentist

36

Multiple Sclerosis

Vice President

58

Acute Myocardial Infarction

Owner / Manager

45

Myocardial Infarction, Coronary Artery Disease

OB/Gyn

62

Fracture, Elbow-Radial Head and Neck

General Surgeon

55

Parkinson’s Disease

CPA

62

Parkinson’s Disease

Vascular Surgeon

59

Peripheral Myelopathy

Dentist

30

Thoracic Outlet Syndrome

V.P. Finances

50

Shouldn't I just buy Critical Illness Insurance?

Critical illness is a great benefit if you need a huge lumpsum immediately that's tax-free to help you recover from an illness like cancer or heart attack. That's the main difference: it's a lumpsum and will only cover you if you survive an illness. It won't pay you for an accident or mental disorder or back pain that causes you not to work.


Disability insurance will pay you for both injury and illness in the form of a monthly benefit for as long as you aren't able to work. It depends on your income. Critical illness insurance depends on how much you can afford to buy up to $2 million.

Critical illness will pay you a one-time, tax-free lumpsum e.g. $50,000. Disability insurance will pay you a monthly benefit e.g. $3,000 a month. $3,000 a month for 30 years is equivalent to $1,080,000! It all depends on how long you need the money for.

Disability Insurance vs. Critical Illness Insurance

Disability Insurance

  • Based on your income or salary. 
  • Need a job to qualify.
  • Can buy up to how much your income qualifies.
  • Paid as a monthly benefit taxable or tax-free.
  • Can claim multiple times.
  • Injury coverage mandatory, sickness optional.
  • Benefits paid from day one or after 90 days.

Critical Illness

  • Not based on income.  
  • Don't need a job to qualify.
  • Can buy maximum of $2 million coverage
  • Paid as a one-time tax free lumpsum.
  • Can only claim once.
  • Covers only for covered illnesses usually 25.
  • Benefit usually paid after 30 days of survival.

Conclusion:

It comes down to what you can afford not to lose when you become sick or hurt. If you can't lose your income for the next 5-30 years, then disability insurance is likely the best option. If you're not worried about future income and would prefer a cash lumpsum to help you recover from a major illness, then critical illness is suitable. Keep in mind critical illness will only pay you once and doesn't cover injury or accidents.


Ultimately, your budget will play a factor as well. You can buy unlimited amount of critical illness but with disability it will depend on what income you can justify and prove. Either way both are good options when you need them.

Get A Disability Insurance Quote

Disability insurance quotes
  • Request Quotes.
  • Review Quotes With Blue Alpha Wealth.
  • Buy Disability Insurance Risk Free.