Why disability insurance?
We get this question often. The truth is, disability insurance is one of the most important types of insurance available. After all, it protects your greatest asset; your ability to earn an income.
The reality is that government sponsored programs such as CPP and EI just don’t provide the level of disability coverage that most of us would need in order to get by, especially if you’re self-employed.
Who needs disability insurance?
- A graphic designer who is battling depression
- A mechanic who needs weeks to recover from a car accident
- A professional sales person whose strength and energy is depleted by chemotherapy
- The owner of a software company who needs time away from the office to recover from a heart attack
- An electrician who breaks his arm while skiing and can’t work for eight weeks
Nobody wants to consider the possibility of being disabled for any length of time. But these things happen. Group disability insurance can provide income replacement benefits to business owners and employees alike, at a time when they need it most. Regardless of the cause, injury or illness, if you are unable to work, benefits are payable based on the specifics set out in your contract.
Short Term Disability Insurance
Short Term Disability protection (STD) is designed to provide immediate income replacement benefits to employees unable to work due to an injury or illness. Short Term Disability benefits are typically payable for 4 – 6 months, coinciding with Long Term Disability waiting periods. It is often an employer paid benefit and, as a result, is usually taxable in the hands of the disabled employee. The benefit replaces a percentage of the employee’s weekly earnings up to a specified maximum. Once the end of the coverage period has been reached, an employee would be transitioned to Long Term Disability coverage as long as they continue to meet the definition of total disability.
With Short Term Disability coverage in place, employers are able to apply for an Employment Insurance (EI) premium reduction
Long Term Disability Insurance
Group Long Term Disability coverage (LTD) provides plan members with replacement income in the event of a disability caused by an illness or accident occurring on or off the job. If a plan member is unable to work due to a disability, a percentage of income is payable monthly following the elimination period. These monthly income replacement benefits allow a plan member to provide for the basic necessities and maintain their standard of living.
The amount of coverage available is typically expressed as a percentage of monthly earnings (i.e. 67%). Coverage is guaranteed medically up to a certain threshold, referred to as a Non-Evidence Maximum (NEM). Additional protection is often available on an optional basis up to a specified overall maximum, with proof of medical insurability.
In addition to coverage maximums, plan design features include elimination periods, benefit periods, definitions of disability, taxation of benefits and optional benefits. Let us help you make sense of the options available and design the ideal LTD program for your business.
Claims management services and employee assistance benefits are commonly included in your Group Insurance Plan when LTD is selected. These programs are designed to assist companies dealing with an employee on disability claim and to help a disabled employee return to work in a timely manner.
As a business owner or high income earner, your disability insurance needs are unique. An individual disability insurance policy can supplement your group LTD benefits by providing access to higher coverage amounts and options that allow for a higher degree of customization.