It is no surprise that our health and well being is at the forefront of conversations these days. Covid has brought mental health and the need for disability insurance to top of mind.
Most often when we think about disability, we think of someone who engages in risky behaviour like heli or back country skiing, driving erratically and without care, or a deep-sea scuba diver or one with bad lifestyle habits like smoking or drinking excessively. However, less than 10% of disabilities are caused by accident, including workplace accidents or motor vehicle accidents.
Statistics Canada states 1 in 7 Canadians have a disability. The most common ailments may surprise you. Mental health being the leader in claims for disability followed by musculoskeletal (i.e., arthritis), then cancer and heart disease. Age does not matter, when 1 in 6 individual disability claims are made by someone under 40. And records show, more than 30% of all people who are between the ages of 35 and 65 will suffer a disability lasting longer than 90 days and about 1 in 6 can expect to become disabled for more than 5 years.
Disability insurance is about protecting your income, making sure you can cover your bills should you become sick or injured. How would your finances fair should something happen to you? During the early part of Covid last spring, many businesses were forced to shut their doors; the realisation of no income for several months was devasting for some. An injury or illness for several months or years too can become a real financial hardship for many to overcome.
As anyone who has been off work for an extended period will tell you, the financial cost associated with that circumstance is unfathomable. Consider a cancer patient who has been off work for nearly a year with surgery, treatments, and physical and emotional recovery or someone who has been in a motor vehicle accident and requires ongoing rehab. Some costs may be covered, and while some expenses may drop off (e.g. travel, hobbies, dining out), you are likely to incur many new ones. Some of these may be covered by employee extended health benefits, MSP or ICBC but typically you will be responsible for the majority of them. Ongoing business expenses are not covered by any government or group program. While you are likely familiar with typical rehab expenses like chiropractic treatment, physiotherapy and massage, a long-term disability can bring unexpected additional expenses such as house cleaning, help with shopping, childcare expenses and meal preparation.
When applying for disability insurance, or any insurance for that matter, remember, not all policies are created equal. If you need to claim on the policy, making sure you’ve invested in a good one can make all the difference. Some plans offer very restrictive definitions and/or broad exclusions and are not underwritten until claim time. As a result, they may not pay out as you had hoped. Being surprised at a vulnerable time, when you need protection the most, can be very upsetting so you should know the terms and benefits of your contract before you buy the insurance. This will help give you peace of mind that your insurance will pay out when you need it most.
There has also been some confusion about how the COVID vaccine will affect your benefits which by the Canadian Life and Health Insurance Association, “Getting the vaccine will not affect your insurance coverage. No one should be afraid and choose to not protect themselves from COVID-19 because they are worried about it affecting their benefits. All of Canada’s life and health insurers are supportive of Canadians receiving government approved vaccinations to protect themselves from serious illness and death.”
COVID-19 vaccinations have been approved by and are being administered through Health Canada. These vaccines have no impact on the application or claims practices of insurance policies.
While it may be tempting to view disability insurance as an additional expense, the cost of not having a plan in place can be devasting to your financial future. Pricing is influenced by a number of factors including, disability claims statistics, health, age, sex and benefit amount. The younger and healthier you are, the cheaper the insurance. We have not seen a change in insurance premiums due to Covid yet, but we may see rate increases in the future depending on how this global pandemic affects claims. Therefore, exploring your options sooner may allow you to lock in premium rates.
Comprehensive professional plans have guaranteed premiums, are non cancellable by the insurance company and provide protection for your working years right up to age 65. A layered approach or hybrid type of plan, with short term and long-term disability can adequately protect your income and help you financially survive a disability.
This article has been provided by Sindy Billan, SB Wealth Solutions* and Saskia Vermeulen, Southlands Financial is for informational purposes only. It is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by Sindy Billan or Saskia Vermeulen as to its accuracy, completeness or correctness. *SBILLAN Wealth Solutions Inc. doing business as SB Wealth Solutions E&O/E 2021