Disability insurance is an insurance plan put in place to protect you from the potential loss of income in case you are injured and rendered disabled. It protects you by providing you with a steady course of income.
Protecting your earning potential is very vital to your family because a couple of months of a stopped income due to disability can be dangerous to your family’s financial situation. Statistic show that illnesses and accidents are responsible for 1 in 3 Canadians being unable to work for 90 days or longer at least once before reaching the age of 65.
Here are some factors that should be considered when purchasing Disability insurance
- How long do you intend to work? The later you retire, the greater the risk is of possibly incurring an injury and becoming disabled.
- Would your spouse be able to generate enough income to support the family in the case of your disability? If this is possible by working extra hours, it is taking away from the time they can be spending with you, helping you.
- What types of compensation will you receive from the government to cover your disability? The top government disability benefits are: Employment Insurance, Workers’ Compensation and the Canada Pension Plan. All of these plans have certain limitations and requirements. Disability insurance can cover you when these plans end.
- To what extent does your family depend on your financial earning capability? Disability will result in your family needing a financial income source.
- How is your income divided? The greater the percentage of income from work is compared to investments, the more dependent you are on your job.
- How long can you survive at the same standard of living based of just savings? The shorter this time period is, the more dependent you are on your job
Check out the link below for a Disability Needs Calculator
Disclaimer: Insurance, Investment and Mortgage products & services are provided by Devangkumar Shah.
Mutual Funds license sponsored by Shah Financial Planning Inc.
Lotus Loans and Mortgage ltd. is the principle mortgage broker.