Disability insurance

Some, but it’s limited, and it isn’t built to replace your income:

• EI sickness benefits pay just over half your earnings, up to a weekly maximum, for up to 26 weeks, if you’ve worked enough insured hours. Self-employed people are covered only if they registered for EI special benefits at least 12 months before claiming.
• The CPP disability benefit is only for a long-term condition that stops you working at any job on a regular basis, and only if you contributed in enough recent years.
• The Canada Disability Benefit and provincial disability programs are for people with low incomes.

Most workplace disability plans also subtract CPP disability from what they pay.

Any illness or injury that stops you working, including a mental health condition. Whether a claim is paid depends on two things in your policy:

• its definition of disability, such as own occupation or any occupation;
• its exclusions: the insurer may exclude a condition you already had when you applied.

Your income sets how much you can get. Insurers cover a share of it, roughly two-thirds at moderate incomes, falling to about half at higher incomes, up to a monthly maximum, and any workplace coverage counts toward that limit. Without earned income, there’s nothing to insure. Your age mainly affects the price, which is higher the older you are when you buy.

Not always. You answer health questions, and for larger amounts or at older ages the insurer may also ask for a medical exam, blood tests or a report from your doctor. If you can’t qualify for a fully underwritten policy, simplified issue and accident-only plans ask fewer or no health questions, with lower limits or narrower coverage.

A workplace plan usually pays a set share of your salary, up to a monthly cap. Its benefit is taxable if your employer pays any of the premium, and it usually ends when you leave the job. An individual policy is chosen to fit your income, within the insurer’s limits. It stays with you if you change jobs, and its benefit is generally tax-free when you pay the premiums personally. If your workplace plan leaves a gap between what it pays and what you earn, an individual policy can top it up.

With group insurance, coverage typically ends when you leave your employer, unless your plan lets you convert to individual coverage. If it does, you usually have to apply within a short window after you leave, so check the deadline in your plan. Individual disability insurance is not tied to your job, so it continues regardless of your employment status.

They’re two ways a policy can define being disabled. Own occupation pays if you can’t do the main duties of your own job, even if you could work in another one. Any occupation pays only if you can’t do any job you’re reasonably suited to by education, training or experience, which is harder to qualify for.

Some policies use own occupation for the first two years of a claim, then switch to any occupation. Own occupation coverage usually costs more, and it isn’t available for every job. We’ll explain which definition a policy uses and what it would mean for your work.

Yes. Insurers usually look at your earned income over your recent years, often as an average, using your tax returns or financial statements, so a strong year and a slow one can balance out.

If you’re incorporated, they look at the salary and dividends you take, and some also consider earnings you leave in the business. If you’ve only recently started, or your income has dropped, the amount you qualify for may be lower. Some plans ask fewer questions about income, in exchange for lower limits.

We’ll go through your income history with you before you apply, so you know what to expect.