Disability Insurance

Whether you own an individual disability insurance plan or have group disability insurance coverage, disability insurance is critical during working years, when you rely on earned income. Disability, or income replacement insurance, is designed to replace your income if you are unable to work because of illness, or injury. This primary financial need should be met first, before you purchase other living benefits coverage.

Typically the insurance will replace between 60% to two-thirds of your regular earned income. This disability income gap, as it’s called, is designed to encourage you to return to work and your full earning capacity as soon as possible. In most cases, coverage is sufficient to meet basic living expenses, but there may not be enough money to make regular RRSP contributions or save for your children’s education.  If you have any extraordinary disability expenses, of If your spouse has to take time off to care for you or the children, you might be forced to dip into your savings or borrow money to supplement your disability benefits.