What You Need to Know About Long-Term Disability Insurance

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What You Need to Know About Long-Term Disability Insurance

What You Need to Know About Long-Term Disability Insurance

We often think about how close we are to retirement or how excited we are to just get to the weekend after working, but what if you weren’t able to work? One of the best ways to protect your means of income is through long-term disability insurance for both self-employed and employed workers.

But what do you actually get out of disability insurance? What happens if the company you work for goes bankrupt while you’re on disability insurance? We answer all those questions and more below.

Do You Need Disability Insurance?

Ultimately, deciding on any kind of insurance is up to you, but it’s never a bad idea to get some additional protection for yourself. This is especially true if your chosen career requires you to be fully mobile and use most of your body while working. This includes industries like trades, manufacturing, or entertainment.

However, disability insurance is helpful for anyone who wants to protect their income and continue to receive payments even if some kind of accident or injury prevents them from working comfortably.

Young woman who's self-employed is workingCan I Get Long-Term Disability Insurance If I’m Self-Employed?

Yes! Disability insurance is especially helpful as a support net since if anything happens to your business (or yourself) you can still receive income to support yourself. To get disability insurance as someone who’s self-employed you’ll need to provide proof of income for a substantial period of time to show you’ve been working for yourself.

What Are Some of the Advantages of Long-Term Disability Insurance for Both Self-Employed and Employed People?

In the event you’re involved in a debilitating accident, long-term disability (LTD) insurance provides enough of a monthly payout for you that you can support yourself without worry. The payout is substantial enough to cover groceries, mortgages/rent, utilities, etc. so you can still live stress-free without worrying about your monthly payments for things.

To note, LTD will typically cover you until you reach 65 and your Canadian Pension Plan can be used.

What Are the Types of Disability Insurance?

There are two kinds of disability insurance: short-term disability insurance, and long-term disability insurance.

Short-term disability insurance is usually offered to cover the loss of income from short-term or temporary health issues arising from a less serious illness or accident.

The benefit payments will start once you use your full sick leave (if you have it), sometimes as early as 1-14 days after a claim is submitted, with coverage lasting typically between 6-26 weeks. In some cases, it can sometimes cover up to 52 weeks (1 year).

You’d likely claim this kind of insurance for injuries like back problems or sports-related injuries that prevent you from comfortably doing your current job.

Long-term disability insurance is as the term states: to cover long-term periods of time. LTD’s intention is to be claimed in the event you have crippling, ongoing health issues that prevent you from working regularly or entirely from 2 years all the way up until you’re 65 years old.

Common health issues people claim this kind of insurance for include musculoskeletal problems, and debilitating and/or crippling accidents.

Carpenter building new homeWill I Still Get Disability Insurance Payouts if my Employer Goes Bankrupt?

Yes, you don’t need to worry about your insurance payouts. Because the money is coming from your insurance provider and not the bank, you can continue to receive regular payouts.

It’s never a bad idea to have a backup plan when it comes to earning income. Both short-term and long-term disability insurance can provide essential funds when you need them the most and help you continue to live your life.



Does disability insurance sound right for you? Book an appointment to discuss what your best option is today!