Coronavirus: Will disability income insurance cover me?

Learn how disability income insurance can help – whether you’ve already got coverage or you’re thinking about buying it.

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We’ll continue updating this page with resources and information as new details emerge on how Canadian leaders and businesses are responding to COVID-19.

The coronavirus (COVID-19) pandemic is putting thousands of jobs at risk. If you’re worried about being out of work for a while, either because you could fall sick or your business might be forced to close, income protection insurance could help.

How does disability income insurance work?

Disability insurance pays out a percentage of your salary, usually anywhere from 60% to 85% of your income, if you’re unable to work due to a debilitating injury or illness. It replaces part of your paycheck for a specified period of time. Each insurer will have a list of disabilities that qualify for benefits.

There are two types of coverage:

  • Short-term disability insurance (STD) typically replaces part of your paycheck for up to 6 months.
  • Long-term disability insurance (LTD) usually replaces 60% to 70% of your paycheck for 2, 5 or 10 years, or until you reach retirement.

With a typical quarantine time of only 14 days, you’d most likely invoke short-term disability insurance to cover the impact of COVID-19. It’s typically available to both employed and self-employed people, and some income protection policies may even even let you add involuntary unemployment coverage to your policy. That way, you’re not just covered in the event of illness or injury, you’re also covered if you’re let go.

Will disability insurance help if you catch COVID-19?

If you have disability insurance, you should be able to claim on your policy if you catch COVID-19 and are out of work for a while. If you buy a policy today, you may even be covered for COVID-19 if you catch the disease in a few weeks.

While STD policies usually include a “waiting period” that can range from 1 to 10 days before you start to receive benefits, many life insurance companies are waving the waiting period requirement based on the Canadian Life and Health Insurance Association (CLHIA) recommendation. This way people infected with COVID-19 or who are adhering to a medically-directed quarantine can start receiving their short-term disability insurance benefit right away.

Canada Life, Manulife, Blue Cross, and iA Financial Group have all announced they will be waiving the waiting period for eligible COVID-19 cases. Sunlife has also announced that they will consider giving STD benefits to those who show no symptoms but are placed under quarantine. With the ever-evolving response to COVID-19, your best option is to check with your insurance provider to make sure you get access to its most up-to-date benefits.

What if you’re laid off because of COVID-19?

If you have disability insurance with additional involuntary unemployment coverage, you may be able to make a claim in the event you lose your job or your business has to close because of the coronavirus.

However, unemployment coverage has some key restrictions. First, your policy may require a no-claim period. This is the length of time from when you buy your policy to when you become eligible for benefits.

There is also a waiting period. This is the length of time from when you lose your job to when you can claim benefits. Typically, the waiting period is 30 days.

That means if you bought your policy today, you would have to be safely employed for certain number of months and be out of work for 30 days before you could lodge a claim for involuntary unemployment benefits.

What you can do if you lose your job due to COVID-19

Is it too late to get disability insurance?

No. It’s never too late to get disability insurance. Even if you don’t end up needing it due to the coronavirus (COVID-19) pandemic, it may come in useful at a later date.

So if you’ve been thinking about getting disability income insurance, there’s no harm in doing it now.

What are my other options for financial help during COVID-19?

Regardless of whether disability insurance is right for you, there are several other ways you can seek financial support if you’ve been adversely impacted by the coronavirus pandemic.

People who qualify for the Disability Tax Credit (DTC) will receive a one-time, tax-free payment of $600 from the government to help offset extra costs.

Seniors getting Old Age Security (OAS) will get an extra one-time payment of $300, and those getting the Guaranteed Income Supplement (GIS) will get an extra one-time payment of $200. Those eligible for both will receive a total of $500 extra during the week of July 6.

Additionally, the government has enacted a $9 billion plan to help relieve students and recent graduates of the financial burden caused by COVID-19. With the Canada Emergency Student Benefit, those who have a disability or are taking care of someone may be eligible to receive $1,750 per month from May-August. Recipients must be current post-secondary students, planning on attending school in September 2020 or must have graduated as of December 2019.

You may be eligible to receive Employment Insurance (EI). The Canadian Government has waived the one-week waiting period for people in quarantine, so you can access that as soon as you’re off work. You also no longer have to submit a doctors note as part of your application.

If you’re worried about the prospect of unemployment, read our guide on how to prepare, so you’ll be in a stronger financial position if you do find yourself out of work. If you’ve already lost your job, you may be able to claim financial hardship and take a break from certain bills. Our guide walks you through the ways you can get help.

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Name Product Types of Insurance Coverage Range Issue Ages Medical Exam Required Province Availability
PolicyMe life insurance
Life Insurance
$100,000 - $10,000,000
18 - 80 years old
No
Ontario, Alberta, Manitoba, New Brunswick, British Columbia
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 Life Insurance Through PolicyAdvisor
Life Insurance, Mortgage Protection, Disability, Critical Illness
$25,000 - $5,000,000
18 - 72 years old
No
Ontario
Policy Advisor is a digital life insurance brokerage that has partnerships with 17 insurers in Canada.
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