Disability Insurance

Income protection when you are too disabled to work.

How does it work?

Disability Insurance is a monthly benefit payout to you when you become hurt, sick, injured and too disabled to work. This type of insurance is calculated from your monthly income. The risk analysis on what level of disability insurance you can qualify will also be calculated based on what type of work you do for a living. Note: there is a waiting period (like a deductible) of 30, 60, or 180 days before your benefits start. It all depends on how you want to structure you plan. E.g. you may want to use up your short term disability coverage via your Employment Insurance and then allow your disability insurance to work. It all depends on how you want to organize it.

How long do benefits last?

You can buy enough to last you a couple of years, or go up to five years or go up to age 65.  It depends on the type of policy you choose and qualify.

What if my disability lasts for a very long time?

You can add a “rider” or options for LONG TERM CARE insurance, for if you get so disabled that you are not able to do the basics of self-care, such as mobility, feeding yourself, bathing, and other basic needs of life. A long term care option will pay for all the extra expenses of having a private nurse or care aide. Valuable help for when you need it the most. Don’t assume your family will want to be your caregiver for free when you are disabled.

Are there taxes? Benefits claimed are not taxable. For private disability insurance, you will receive your benefits on a monthly basis, these benefits are considered an insurance claim and not income as per Canada Revenue Agency rules on income tax.

What about Accident and Sickness Insurance?

You can buy this type of insurance separately or attach it to your disability or even life insurance policy. Accident and Sickness insurance is much easier to get because there is no medical and no qualifying criteria required compared to the other more complex insurances. Anyone up to the age of 80 can get it. It usually paid out as a lump sum payment.


Long-term care insurance offers a monthly benefit if you become unable to care for yourself due to:

  • aging,
  • an accident,
  • an illness, or
  • deteriorated mental abilities (ie a stroke, head injury, etc)

You can use the money from this benefit any way you need. Don’t deplete your savings. And no, the government does not cover everything. In fact, when you are seriously disabled, the government covers surprisingly very little.  Long term care insurance will improve your quality of life because it will pay a few bills.


Many LTC policies have a waiting period of 30, 60, to 180 days or longer. It all depends on how you want to structure it. The longer your deductible or waiting period, the less expensive your monthly premiums. The payouts are usually monthly benefits, once your claim has been approved. Normally, a medical report from your medical provider is require along with your claim forms.  Call your advisor for more specific information.

When can I make a claim for Long Term Care?

Typically, someone can receive long-term care insurance benefits when they become dependent on another person for care. This means they need:

  • constant supervision by another person because of deteriorated mental abilities;
  • substantial physical assistance with two activities (from a list of six) of daily living like getting dressed or eating;
  • stand-by assistance for bathing and transferring (e.g., moving from a chair or out of bed).

You can make a claim to receive benefits when your coverage becomes effective. Often that is immediately after you buy long-term care insurance. Other long-term care plans only provide coverage after age 65.  It all depends on your policy and the insurance carrier that offers the product.

Once coverage is effective, you must remain dependent for the number of days in the selected waiting period before you start receiving benefits. The benefits that are paid out are not taxable.

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