According to statistics, today, on average, over 435 people were in car accidents across Canada. Some of those people might not be injured, while eight of those people died.
There will be a wide range of injuries, minor to life-altering. Some of these people will be unable to work for months. Some may never work again.
But no matter how drastic the severity of their injuries were, all of those people have one thing in common: None of them woke up this morning expecting to get into an accident.
What if that happened to you? Would your family be provided for if you were left unable to work, or would you be on the way to the poorhouse?
If you don't have disability insurance, the answer might be the latter.
After a major accident, the last thing you need is a throng of bill collectors trying to knock down your door. But if your needs are taken care of, you can recover in peace.
For more information about how disability insurance can help you stay on top of household bills after an accident, read on.
Simply put, disability insurance is a type of policy that pays out if you find yourself unable to work.
If you are in an accident or have a major illness, you may not be able to fulfill your duties at your job. Even if you don't lose your job, your company will probably not pay your full salary while you're gone--if they pay you at all.
A disability insurance policy will pay you during that time so you are able to make your living expenses.
If you have a good policy, your benefit amount (that is, how much you get paid) will be about the same as your regular paycheck from work.
Before we dive deep into the different kinds of disability insurance, there are a few terms we need to go over.
The elimination period is the amount of time you have to be considered disabled for your policy to start. It's not uncommon for a policy to have an elimination period of 90 days.
The benefit period is how long you will receive benefits from your policy. This can be as short as a couple years or until you reach retirement age, depending on the severity of your disability. This also depends on your policy, so pay attention.
Not every injury will activate your policy. If you have a particular risky hobby, your insurance policy might have a specific exclusion regarding that.
For instance, if you're an amateur avalanche snowboarder, your insurance policy might not cover you if you get paralyzed while trying to outrun an avalanche.
Exclusions might also include pre-existing conditions.
Pay attention to the exclusions of any policy before purchasing it.
There are two different kinds of disability insurance: long-term and short-term.
Not every injury is with you forever. Sometimes, you might just be laid up for a couple months.
However, even if you're unable to work for a few months, that's a few months without pay. And for most people, just a few weeks without a paycheck is enough to bankrupt you.
Typically, a long-term policy will have a longer elimination period and a longer benefits period.
But if your injury isn't serious enough to last through the elimination period of a long-term policy, you could be facing no benefits at all, even though you were unable to earn a salary during that time.
In this case, you will need to have a short-term disability policy. As you can probably tell, they have shorter benefit periods. Typically, they last for three, six, or twelve months.
But, their elimination periods are much shorter than a long-term policy. That means you can start drawing your benefits sooner.
A short-term policy can also help you if you're waiting for your long-term policy to kick in, but you don't have enough in your emergency fund to cover your expenses.
If you work for a large company, they probably include some kind of disability insurance in their benefits package. You likely already have a policy if you've been working there long enough.
But, these are often generic policies that might not suit your needs. You can also buy your own disability insurance to make sure that you get the perfect policy.
Just keep in mind that group plans are typically less expensive than individual plans, so your work's plan will likely be cheaper.
If you've been working long enough, you might be eligible for benefits through the Canada Pension Plan.
Every Canadian automatically pays part of their earnings into the CPP. If you are unable to work, but you have paid enough into the CPP, you can begin drawing your benefits.
This is not very helpful for Canadians far from retirement age, though.
The purpose of disability insurance is to make sure that you can pay for your living expenses - things like your rent or mortgage, utility payments, groceries, and other necessities.
That said, there are no regulations on what that money is spent on.
Most often, your benefits will be paid out in the form of a check or a refilled debit card that you can use like cash. In short, that means you can use your benefits however you want.
While there is no one forcing you to use your disability benefits wisely, you generally won't be able to afford to blow your money on whatever you want.
You might look at the cost of a disability insurance policy and think, "I'm young, I'm healthy, I'm generally pretty safe. I can do without disability insurance."
But accidents happen every day. And someday, it might even happen to you.
If that happens, will you be able to afford to skip out on disability insurance? As the saying goes, it's better to be safe than sorry.
To find the best insurance policy you can, use our quote finder.