Disability Insurance Finder

If you rely on your paycheque to survive, a disability insurance policy can cover you in the case of injury or illness.

Last updated:

Man in wheelchair using tablet

Disabilities are more common than you might think, with roughly 22% of Canada’s population having one or more disabilities in 2017, according to Statistics Canada. That’s where disability insurance comes in. It can protect your livelihood and replace a portion of your paycheck if you can’t work due to an illness or injury.

Compare life insurance providers

Name Product Types of Insurance Coverage Range Issue Ages Medical Exam Required Province Availability
 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.
loading

Compare up to 4 providers

*The products compared on this page are chosen from a range of offers available to us and are not representative of all the products available in the market. There is no perfect order or perfect ranking system for the products we list on our Site, so we provide you with the functionality to self-select, re-order and compare products. The initial display order is influenced by a range of factors including conversion rates, product costs and commercial arrangements, so please don't interpret the listing order as an endorsement or recommendation from us. We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs.

What is disability insurance?

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.

How does disability insurance work?

An important component of disability insurance policies is the elimination period. Also called a waiting period, this is the length of time you’ll wait before you start receiving benefits. It starts on the day you become disabled. With short-term disability insurance, the elimination period usually ranges from 1 to 10 days. And with long-term disability insurance, the options are usually 90 to 120 days. To decide on an elimination period, think about how long you could pay for your own medical bills out-of-pocket before your coverage kicks in.

Once the elimination period ends, the benefit period begins and you’re eligible to collect benefits. The benefit period for STD tends to be a few months long, while LTD pays out up to a specific age or for a set number of years. After the benefit period is over, you’ll stop receiving disability benefits.

What’s the difference between worker’s compensation and disability insurance?

Worker’s compensation protects employees who get injured or become ill on the job, while disability insurance covers debilitating health conditions that aren’t work-related.

What qualifies for disability benefits?

It depends on your insurer, and the type of disability insurance coverage you have. But these are some examples of conditions that could be covered under each policy:

Short-term disabilityLong-term disability
  • A disabling injury — like a broken leg or hand
  • A prolonged sickness — such as glandular fever
  • A musculoskeletal disorder — including acute back pain or spine and joint disorders
  • A chronic digestive disorder — like gastritis
  • A mental health condition — such as anxiety or depression
  • A complicated pregnancy
  • Musculoskeletal and connective tissue disorders — like osteoarthritis, chronic back pain or slipped disks
  • Accidental injuries — like brain trauma caused by a car accident
  • Cardiovascular disorders — such as heart attacks or serious heart conditions
  • Circulatory disorders — like coronary artery disease
  • Prolonged mental illnesses — including PTSD and major depressive disorders
  • Cancer

How to get disability insurance

If you’re sold on the idea of securing a “replacement paycheck” in the event you can no longer work, here’s how to go about it:

  • Check for employee-sponsored coverage. Unfortunately, employers are not required to offer any kind of paid sick leave. However, many employers still do provide these programs, so you should check with your employer first.
  • Buy an individual policy. You can purchase a policy directly from an insurance company. The major benefits of choosing this option are that the coverage is not linked to a specific company, so you can carry it with you even if you change jobs, and you may be able to customize your elimination and benefit periods to suit your financial situation. Just be sure to shop around to get the best possible rate.
  • Governmental disability benefits. You may be eligible for government disability insurance if you haven’t purchased a private policy and your employer doesn’t offer one. Employment Insurance (EI) sickness benefits can potentially subsidize your income for up to 15 weeks, if you meet a set of minimum requirements. You could also qualify for disability benefits from Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) if you previously contributed to the programs.
  • Go through a professional association. Some professional associations partner up with disability insurance companies to offer policies at discounted rates.

Check into all your options!

Keep in mind that there may be even more options to help replace your income in case of a disability. For example, Canadian Armed Forces members could receive benefits through the Veterans Affairs Canada Disability Program. Provincial or territorial disability benefits may also be available, like through the Ontario Disability Support Program (ODSP). Before you settle on any benefits, make sure to do your research to determine what you’re eligible for.

Average cost of disability insurance

Your premium will come down to your coverage amount, benefit and elimination period, occupation, health, and where you live. To give you an idea of how much you might pay for coverage, the average cost of a long-term disability insurance policy is 1-3% of your annual income. So, if you earn $65,000 a year, you might pay between $650 and $1,950 a year.

To cut down on your premium, you can:

  • Increase the elimination period.
  • Decrease the benefit period.
  • Reduce your coverage amount.

What happens if I’m disabled but can still work?

The answer lies in your insurer’s definition of disability. There are two types of plans:

  • Own-occupation disability insurance pays out if you can’t work in your usual occupation, but you can work a different job. If you do start working in another job, any benefits you’re receiving before then may be reduced or stopped.
  • Any-occupation disability insurance pays benefits if you can’t perform any job. To qualify, you’ll need to prove you don’t have the physical or mental capacity to work.

Is disability insurance worth it?

If you rely on your income to survive and don’t have substantial savings, a disability insurance policy can offer peace of mind. If you become disabled and can no longer work, your coverage will kick in to replace part of your income so you can cover your living and medical expenses.

The best type of policy for you depends on your financial situation. Short-term disability insurance can replace a large percentage of your salary, but the benefit period is limited. As such, it suits those who don’t have an emergency savings fund to fall back on.

On the other hand, long-term disability insurance lasts several years or even until retirement, when CPP steps in. The list of covered illnesses and injuries is far more comprehensive, and includes the likes of arthritis, back pain and heart disease. However, it’s usually more expensive, so factor that into your decision.

Bottom line

Disability insurance pays benefits if you become disabled and can’t work, making it the truest form of income replacement. A policy can help you to cover your living and medical expenses until you’ve recovered from an injury or illness. You can choose between short-term and long-term coverage, which have different elimination and benefit periods — but neither will replace your entire paycheck.

If you’re thinking about getting a fuller range of coverage, consider purchasing a life insurance policy.

Read more on this topic

  • Will my life insurance cover the coronavirus? Find out how the coronavirus pandemic affects your life insurance policy. If you don't currently have a life insurance policy, you may have to wait to apply.
  • Group accident insurance Group accident insurance is a great add-on for any employer-provided benefits plan. Find out what it is and if it's the right option for your business.
  • How to get cheap life insurance in 2020 Our guide to finding an affordable policy without skimping on coverage. Learn what to look out for and tips for getting the coverage you need.
  • How to get life insurance if I smoke pot Will using cannabis prevent you from getting life insurance? Read this to learn how cannabis use can impact your policy.
  • How does life insurance work? Life insurance can help your family recover financially from unexpected loss. Find out how life insurance works and what policy may be right for you.
  • Life insurance policy ownership Find out who the actual owner of a life insurance policy is, if ownership can be changed, what happens when the owner or beneficiary dies and more.
  • What's Universal Life Insurance? A type of permanent life insurance that offers flexibility and invested cash value, but is it the right investment option for you?
  • What's Permanent Life Insurance? A permanent policy doesn't expire and can build cash-value. It gives you the satisfaction that your loved ones will always be taken care of - but is it worth the cost?
  • Critical illness insurance Critical illness insurance provides you with a lump sum benefit in case you become seriously ill and can't work. Learn about it and if it's the right insurance option for you.
  • Guide to mortgage disability insurance Mortgage disability insurance offers mortgage protection if you’re disabled, though it isn’t the cheapest type of disability policy.

Ask an Expert

You must be logged in to post a comment.

Go to site