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Understanding Disability Insurance

Definition Of Disability

If a person is incapacitated in any way and as a result is unable to work in the occupation which he or she has enjoyed or has become accustomed that person is considered disabled. There are companies today still defining disabilities as not being able to work in any occupation after becoming ill. The scary thing is that people live under an illusion that they are covered with disability insurance. Please pay special attention to definition before you buy a policy. The policy must say own occupation.
It is also of great importance that the policy is non cancellable and guaranteed renewable. This indicates that the disability insurance policy cannot be canceled by the company except for non payment of premiums and the terms of the policy itself cannot be altered in any way.
Disability insurance is a form of coverage that will replace a percentage of your income should you be unable to work because of injury or illness. Most policies are written to pay a specific monthly benefit with the upper limit typically being between 50% and 75% of your earned income.

Key terminology to understand in a Policy

  • Total Disability - unable to work due to injury or illness.
  • Partial Disability - unable to perform every duty of your occupation after returning to work following a disability (transition state).
  • Residual Disability - similar to partial disability, but benefits are payable based on reduced earning capacity- generally a part of a long-term policy.
  • Presumptive Total Disability - disability which results from loss of sight, hearing, or limbs.
  • Own Occupation - terminology used to define disability as the inability to perform the customary duties of one’s own occupation.
  • Any Occupation - terminology used to define disability as the inability to work at any occupation, perhaps with the qualification of a comparable level of education or training.

Period of Coverage

Policies can be purchased to cover either short-term or long-term disabilities. Short-term disability policies pay benefits for up to two years. Long-term disability policies pay benefits for periods ranging from a few years to age 65.
The waiting period before collecting benefits is an important aspect of a policy. A disability policy will require that a person be out of work for a certain period of time before receiving benefits. For a long-term disability policy, this “elimination” period can be as short as 30 days or as long as two years.

Where can I get disability insurance?

A licensed insurance agent or broker can help you find disability insurance and other types of health insurance coverage.

For more details, consult with one of our advisor. Call now 416 300 5055.


Sourabh Chadha

Financial Security Advisor