Updated - July 21, 2022
Few people know that long-term disability insurance can be as important (if not more) than signing up for life insurance. That's because you're more likely to suffer from a disability or condition than you are to die prematurely. In Canada, 1 of every 3 people will be diagnosed with a disability before they reach the age of 65, and will be unable to work for 90 days or more.
In the event that a disability or condition does arise, it's important to know that you and your family are covered, even if you are unable to work.
Read on to learn more about long-term disability insurance, and how it can save you and your family during difficult times.
What Is Long-Term Disability Insurance?
Long-term disability insurance is a form of coverage designed to protect you in the event that a condition no longer allows you to work.
This coverage can be claimed for both mental and physical disabilities, providing that the individual is eligible for the benefits. After passing through the waiting period (that varies according to plan) the recipient of the plan will be able to receive a percentage of their monthly salary.
It's very rare that a disability program covers 100% of the income usually received, but you'll find that most long-term disability plans will cover 40%-60% of the income.
Who Is Eligible for Long-Term Disability Insurance?
Long-term disability insurance is typically reserved for conditions that take a longer duration of time (over a year) to heal, or that may not heal their condition at all.
These conditions can include mental disabilities or psychotic breaks, broken bones or muscle nerve damage, cancer treatment or long-term treatment for another serious condition.
In order to get long-term disability, the individual must sign up prior to needing the disability and will have to pass a series of general health requirements. This is usually to screen for pre-existing conditions.
What Does Long-Term Disability Insurance Cover?
Long-term disability insurance covers a variety of conditions that can prevent the individual from continuing work. These conditions may include:
- Injury (on or off the site)
- Mental Disorder (such as bipolar disorder or schizophrenia )
- Heart attack
- Coronary artery disease
- Musculoskeletal or connective tissue disorder
- Chronic Back Pain
- Blindness or vision problems
- Loss of Hearing
- Broken Bones or Muscle Damage
How Is Long-Term Disability Different from Short Term Disability?
Long-term disability insurance is actually one of two disability insurance options. Some individuals may be eligible for short-term disability insurance as well. While both do the same thing in theory (provide a percentage of income while the individual is unable to work) there are still some differences between the two.
Short-term disability insurance tends to provide a higher percentage of income than long-term disability insurance. Short-term disability insurance also covers the individual for a shorter duration of time. Finally, short-term disability insurance typically covers less serious conditions that don't have as long of a recovery period as those covered by long-term disability insurance.
Benefits of Long-Term Disability Insurance
One in seven workers will be unable to work continue in their lifetime due to a disability. For many, the disabled member of the family was once the sole provider of income for the household, rearranging the entire family dynamic. In other cases, there is no one else that can work in the household, which can quickly lead to bankruptcy and even leave a family homeless.
Long-term disability insurance can save a family from dire consequences, especially when they need it the most. By providing peace of mind with your finances, long-term disability insurance can help you focus on restoring your health.
Who Offers Long-Term Disability Insurance
There are a number of places that offer long-term disability insurance, and it will vary depending on your work situation. Some people will be eligible to sign up for long-term disability insurance through their employer, in which case they may or may not be responsible for paying premium fees. In other cases, your employer may not offer it but may sell it instead at a discounted rate.
If you are self-employed or work as a freelancer or contractor, you may want to purchase long-term disability insurance yourself through a company or insurance broker.
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Where to Buy Long-Term Disability Insurance?
There are over 150 insurance companies in Canada alone and a vast majority of them carry long-term disability insurance. It would take months to research and sort though the company, the policies, the rates and the plan details. We always recommend working with a broker like Insurdinary. A broker has access to tools that allow them to enter your unique information into a program which then generates side by side quotes for you from a number of Canada's largest insurance providers. It's important to compare each plan and look into their coverage policies on conditions that you may hold a higher risk of developing in the future.
What to Keep in Mind While Looking for Long-Term Disability Insurance
When looking into various long-term disability insurance plans, there are several things you'll want to keep in mind.
The first is to be sure that you are eligible for the plan and meet all of its requirements. Next, you will want to know the premium rates of the plan and whether or not you can afford it.
You'll also want to know what the waiting period is. This is the period of time you'll need to wait between requesting your insurance and receiving it (typically a maximum of 14 days). It's important to remember that shorter waiting periods typically come with higher premiums. Finally, you'll want to know the exact percentage of income coverage you will be receiving.
How to Sign Up For Long Term Disability Insurance?
After narrowing down your options you will want to compare the details of each plan. Be sure to write down any questions you will need more information about before contacting the insurance policy.
In some cases you can even negotiate insurance premiums, so don't be afraid to ask questions.
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How to Find Your Long-Term Disability Insurance
Finding long-term disability insurance that works for you doesn't have to be a pain. By using the right search tools you can find your best options for disability insurance that works for your unique situation.
The earlier you sign up for long-term disability insurance, the earlier you can experience the peace of mind that comes with knowing you and your family are protected. Whether you think you need disability insurance or not, it's worth having in your corner.