‘Insuring’ Your Future Important for Self and Family

I’ve had a number of questions since my last column on critical illness insurance about protecting oneself and one’s family, should the breadwinner become disabled and unable to work. Can anyone get disability insurance? Is it costly? Does one even need it? What is it and what does it cover?

Knowing the answers to these questions and taking appropriate action depending upon personal circumstances, can mean the difference between the peace of mind that comes from having a financial safety net in place, or potential hardship due to a lack of financial planning.

Insurance is a cornerstone of any financial plan. In the event that an insured individual becomes disabled and is unable to work, disability insurance provides a benefit, usually 60% to 70% of salary, after a predefined waiting period. Depending upon the type of coverage one has, the benefit period could last months or several years. Additionally, disability policies vary based on their definition of total or partial disability. Benefits also vary depending on the insured person’s ability to perform the duties required in their own occupation.

Group disability insurance coverage is provided by many employers as a benefit for employees. It’s important that employees understand what coverage they have and how it can be accessed, including any time requirements for application. Self-employed individuals, or those not covered by their employers, need to ensure that they have adequate coverage to ensure that their living expenses are covered while they are unable to work. Additionally, there are resources available through federal and provincial benefit plans, and various advocacy groups and philanthropic organizations exist to provide education and support for the disabled.

In Ontario, many, but not all employees are covered by the Workplace Safety and Insurance Board (WSIB). Contract workers and some part-time employees may not be covered. In the situation of an employee working for an employer covered by the WSIB, the worker is entitled to a range of benefits if the illness or injury is directly related to the workplace and various other conditions.

Disability can happen to anyone at any time. Unless the benefit is in place prior to injury, it’s too late to apply once one can no longer work. A book by Janet Freedman provides first-hand experience and insight, Hit by an Iceberg: Coping with Disability in Mid-Career is a useful resource and will get you thinking about what you would do if you were temporarily or permanently disabled. Would you have adequate savings and resources to meet your living expenses for six months…let alone several years?

Bev Moir is a financial planner with The Moir Team at ScotiaMcLeod in Toronto.

This article is for information purposes only. It is recommended that individuals consult with their own financial or tax advisor before acting on any information contained in this article. The opinions stated are not necessarily those of Scotia Capital or The Bank of Nova Scotia. When discussing Life Insurance Products, ScotiaMcLeod Investment Executives are acting as Life Underwriters representing ScotiaMcLeod Financial Services (Ontario) Inc.