Disability insurance is an important aspect of financial planning that often gets overlooked. In Canada, personally owned disability insurance offers several benefits that can provide individuals with peace of mind and financial security.
Income Protection
One of the key benefits of personally owned disability insurance is income protection. If you become disabled and are unable to work, disability insurance can provide a portion of your income to help cover your living expenses. This can be especially crucial if you have dependents or financial obligations.
Flexibility and Control
With personally owned disability insurance, you have the flexibility to choose the coverage that suits your needs. You can customize the policy based on your occupation, income level, and desired benefit amount. This allows you to have control over the terms and conditions of your coverage.
Difference to Employer Coverage
Many employers offer disability insurance as part of their benefits package. However, these policies often have limitations and may not provide sufficient coverage. Typical Employer Long Term Disability pays a benefit for a maximum of 2 years. Personally owned disability insurance usually pays until Age 65.
Portability
Unlike employer-provided coverage, personally owned policies are not tied to a specific job or employer. This means that even if you change jobs or become self-employed, your disability insurance remains in effect.
Tax-free Benefits
Because you are purchasing Disability Insurance with after-tax dollars, the benefits you receive while on claim are tax free.