Protecting your life and your plans when you can’t work
Having the right disability insurance will reduce stress to help you focus on getting well, while also providing access to rehabilitation services. istockphoto.com
A serious illness or accident that leaves you unable to work and earn money can happen at any time. Actually, one in three Canadians will experience a period of disability of more than 90 days during their working life.
Disability insurance is designed to help, by providing income so you can focus on getting well. But many people are under-insured, especially professionals and higher-income earners, says Cathy Preston, vice president of Life & Health at RBC Insurance. An income gap can result, with the loss of income leading to insufficient funds to cover living expenses and prepare for retirement. “It creates a lot of extra stress at a time that is already very stressful,” she says.
Despite the odds, many people tell themselves “it won’t happen to me,” a belief Ms. Preston is sympathetic to because of her personal experience with rheumatoid arthritis. “My mother had it, yet – until it happened – I would have told you that I would never get it or have to take time off work.”
Another issue is a widespread misunderstanding about the nature of disability claims, explains Ms. Preston. “A common belief is that most disabilities are caused by accidents, but the leading causes are actually back, muscle and joint problems, and emotional stress and psychological problems.”
“A common belief is that most disabilities are caused by accidents, but the leading causes are actually back, muscle and joint problems, and emotional stress and psychological problems.”
Among busy professionals, stress-related disabilities are particularly prevalent, she says.
A period of disability can quickly decimate personal savings. For example, if you earn $50,000 each year and save 10 per cent for emergencies, you’ll require 10 years of saving to replace just one year of income. “And statistics tell us that if your disability lasts longer than 90 days, it’s more likely to last from two to five years or beyond,” she notes.
Employer-sponsored disability insurance can help, but most people need additional personal coverage to fully bridge the gap, says Ms. Preston. “Among those fortunate enough to have access to benefits at work, more than half do not feel it completely meets their needs. And most don’t understand their coverage, including basics such as the amount they will receive and the length of time they will be covered.”
Some disability insurance plans can also help you get back to work, she adds. “With our benefits, for example, you can receive services such as rehabilitation, transferable skills analysis, job training and education, and job search assistance and placement.”
With the personal insight that comes from her own experience with disability, she urges others to ensure they’re adequately covered before something happens and it’s too late. “We have an online calculator that can help you get started, and your adviser can help you put a plan in place,” she says. “You don’t want to wait until it’s too late.”
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If you have an employer-sponsored DISABILITY plan, consider these questions:
• How much of your income will your employer-sponsored disability plan replace?
• Are you covered for illness as well as injury?
• Are you only covered for accidents on the job, or are you protected 24/7?
• Does your plan provide services to help you get back to work?
• How does your plan define a disability?
Remember that an employer-sponsored plan will end when your
employment ends.