How Does Disability Insurance Work?

A couple's hands are safeguarding disability logo on a table.

How does disability insurance work, and will you ever need it? Unfortunately, unpredicted events can occur, leaving many people unable to work due to disabilities. If you ever sustain injuries or experience disabilities that make it impossible to work, disability insurance can take care of your financial needs. Discover more about disability insurance, how it works, or why you need it in this guide. 

What is Disability Insurance?


If you are ever in an accident or suffer a serious illness, it may impact your ability to earn a living. Disability insurance provides you with compensation when you can no longer work. It works as a tax-free monthly amount that will pay part of your salary, which you can no longer receive.

Disability insurance comes with basic coverage and additional coverage to cover your loss of income. If you become disabled, you can file for your monthly disability benefit. The payment you receive will depend on the insurance company you choose. You usually have a waiting period before your claim can be approved. Even though your monthly benefit will only replace a portion of your paycheck, it can help you pay your expenses for a good period and keep you out of debt.

The Types of Disability Insurance


There are generally two types of disability insurance, namely short-term disability and long-term disability. 

Short-term disability insurance will often provide coverage for up to six months. It is usually used for temporary disabilities and provides the best coverage for short-term illnesses or injuries. You can receive a shorter waiting period for short-term coverage than for long-term coverage, which makes it an ideal option while you wait for your long-term monthly disability benefit to be approved.

A long-term disability can usually last between 24 and 120 months in Canada, and some monthly disability benefit payments can cover you until the age of 65. These are often offered by an employer, but due to the rising costs of inflation, the benefit payments are often not enough. Always review the long-term disability insurance being offered to you to ensure it will provide enough coverage, or take out individual long-term disability coverage of your own.

Why You Need Disability Insurance


Life is unpredictable. Disability insurance may not be something you want to think about if you are healthy or young, but unfortunate accidents or illnesses can happen to anyone. Disability insurance doesn’t just cover visible injuries or illnesses; it can also cover mental illnesses or chronic conditions that affect your ability to work. 

Regardless of the coverage, it helps to be prepared if you cannot work someday. Disability insurance covers most of your paycheck, so you don’t have to worry about taking out loans and going into debt just to pay off your monthly expenses.

It’s important to note that some government disability programs, like the Canada/Quebec Pension Plan (CPP/QPP), may not provide comprehensive coverage in the case of an injury or illness. Even a standard life insurance policy does not cover most disabilities. Disability insurance, however, will help prevent you from using your hard-earned savings or your retirement fund.

Do You Qualify?


Adults under the age of 65 and qualified professionals seeking coverage can qualify for disability insurance. The rates will depend on your age, health status, and occupation, among other variables. It’s important to speak to an insurance advisor, who will help you find the best coverage to protect you in the event of an injury or illness.

Zippo Insurance offers a low premium rate on our disability insurance coverage. Zippo Insurance offers advisor support and a quick and easy application process to help you find the best coverage.

For more information on how disability insurance works in Ontario, contact the Zippo Insurance team today!