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Disability insurance, sometimes called disability income insurance, covers an individual for loss of income due to a disability, which may be due to a physical injury, an illness, or a psychological disorder. Because disability insurance is based on income replacement, you must be working to purchase it.

There are two main types of disability insurance available: Government insurance programs, and Private insurance plans. The type of plan a person has will affect their eligibility for benefits and the type and amount of benefits they will receive.

Government disability insurance programs

There are three government insurance programs available to working Canadians who meet the eligibility requirements and have paid the required insurance premiums.

Provincial insurance

In Ontario, the Workplace Safety and Insurance Board (WSIB) provides disability benefits to sick or injured workers. Most workers in Ontario are covered by Workplace Safety and Insurance. Your benefit entitlement, however, does not depend on whether your employer registers with the Board. If you are an employee covered by Workplace Safety and Insurance, you will be eligible to collect benefits if you have a work-related injury or disease which causes you to lose wages or to require medical treatment. Surviving relatives of a worker who dies in a work-related accident or from a work-related disease are also eligible to collect benefits.

Federal insurance

1. Employment Insurance (EI)

Federal Employment Insurance (EI) sickness benefits are available to workers who have paid EI premiums; and are unable to work due to illness or injury, or are quarantined.

2. Canada Pension Plan disability benefits

These benefits are available to people who have made contributions to the Canada Pension Plan (CPP), and whose disability prevents them from working at any job on a regular basis (includes benefits for disabled contributors and benefits for their dependent children).

Private disability insurance plans

Employer provided group disability insurance plans

Private group insurance Click for info plans are often provided by employers, but may also be available from unions or through associations. Group insurance plans provide disability coverage to employees (or individuals who are part of the union or association) who become disabled and are unable to work. Although employers often pay for the group disability insurance plans, employees may sometimes be required to contribute to the premiums through regular deductions from their pay. If your employer pays for the policy, your benefits will be taxable. If you pay for part or all of the premiums yourself, then you will not pay tax on that portion of benefits.

If your plan is fully employer funded, it is important to find out:

if you will continue to receive benefits if the employer ceases to do business (such as becoming bankrupt) and,

if you will continue to receive benefits until you get new coverage should you leave your job.

Private individual disability insurance plans

Individuals may also purchase their own private disability insurance policies. Individual policies are most often purchased from insurance agents, but in some cases, can also be purchased directly from an insurance company or bank. The two most common types of individual disability insurance purchased are short-term and long-term disability insurance.

Who should purchase individual disability insurance?

Whether an individual should purchase disability insurance and if so, how much, depends on a number of factors, such as:

if your employer does not provide disability insurance

if your employer provides insurance, but you do not feel the coverage is enough

if you are self-employed.

Individual disability insurance plans for self-employed individuals

Self-employed people can purchase individual disability insurance plans that provide income replacement as well as coverage for certain business expenses, such as overhead costs, deferred income taxes, and bank loans or interest on loans.

Benefits of private disability insurance

Individual insurance plans are bought for many reasons and provide a number of different benefits.

They provide the most complete and flexible coverage available because the individual can pick and choose the type and amount of protection they need; and

Unlike employer provided group coverage, individual insurance plans do not end when you change your job or leave an association, they move with you.

Because you are the one paying the premiums for an individual policy with after tax income, should you need to make a claim the insurance benefits are tax-free. Premiums for individual disability insurance policies are usually more expensive than group coverage insurance premiums.

Types of coverage under private disability plans

The three main types of coverage available in most policies are sick leave, short-term disability, and long-term disability. Private disability insurance plans are provided by various insurance companies and can differ with respect to what type of coverage is provided, how much will be paid and for how long. The benefits provided by these plans also vary depending on the needs of the employer, or the individual.

Sick leave benefits usually provide full pay for a short time, such as a few days or a few weeks.

Short-term disability (STD) policies cover the loss of wages for a short period (usually up-to 6 months) after sick leave benefits run out. STD benefits are often paid for by the employer and included in the policy. However, some employers choose not to provide short-term disability benefits, and employees rely instead on government-funded Employment Insurance (EI) sickness benefits.

Long-term disability (LTD) coverage begins after short-term disability or EI benefits run out. As the name suggests, LTD benefits are paid for a much longer period of time, usually for up-to two years if the individual cannot work at their regular job. After two years, if the individual is unable to work at any job, they may be eligible to continue receiving benefits until age 65.

How much do private insurance disability benefits pay?

Employer provided policies

Employer provided disability insurance benefits generally replace 60% to 85% of an insured employee’s regular income, up-to a maximum amount, for a specified time.

Individual policies

For individual, private disability policies, benefits are pre-determined by the policy. The amount is based on a formula taking several factors into account, including the premium cost, percentage of gross income to be paid, and the maximum amount of benefits.

Can you collect more than one source of disability benefits?

Insured workers can receive benefits from more than one disability insurance plan at a time. However, any benefits you receive from one insurance plan can offset (reduce) income you get from another insurance plan. If you have multiple insurance plans and are collecting disability benefits, your total income from all the benefits will usually not be higher than 60% to 85% of your regular pay. In many cases, the amount of your long-term disability insurance benefits will be reduced as soon as you begin getting other sources of benefits, including government payments from CPP and WSIB.

Getting legal advice and help

If you have a long-term illness or injury that makes you unable to work, the benefits you may be entitled to depend on if you have insurance and what type.

If you do not have private insurance, but you were employed

If you do not have private insurance through your employer, or through your own private plan, you may be eligible to receive WSIB insurance benefits or EI benefits. Keep in mind that to be eligible for WSIB benefits the injury or illness must be work-related.

If you have private group or individual insurance

If you have disability insurance provided by your employer, or through your own private plan, you can make a claim for benefits either through your employer or directly with your insurance provider. To claim disability benefits under a group insurance plan or a private, individual insurance plan, your disability does not have to be as a result of an illness or injury that occurred on the job. It is important that your claim be submitted properly and in your best interests.

Debts incurred for investment

While it generally is not considered a good thing to have any debt, some types of debt are considered better choices than others. For example, a debt that is incurred to invest in your future is a usually considered a good financial decision, and better than taking on unnecessary debt to pay for depreciating goods.

Common types of debt that are considered to be an investment include:

Student loans – student loans may be considered good debt because an education is considered an investment in yourself and your future earning potential.

Business loans – investing in your own business is also considered a good debt because the intent is usually to make and grow a successful business and secure a strong financial future.

Mortgages – buying real estate is almost always considered a smart financial investment because the value of real property increases over the long term. Therefore, taking on a mortgage, which generally has a lower interest rate than other debt – such as credit card debt– is considered a good debt.

Other types of debt

Debts that are not considered good financial decisions are ones that will not contribute financially to your future. In many cases, people incur debt to purchase things that decrease in value, and things that are not necessary.

Credit card debt – one of the most common types of debt is obtained through credit cards. This is often considered the worst kind because it is far too easy to spend and carries the highest interest rate. Credit cards are used most often for daily expenses such as restaurants, entertainment and clothing. Interest rates charged by credit card companies are very high, and are payable when the monthly balance is not paid in full. Many people are only able to pay the minimum required payment each month, often taking years to pay off the debt. As a result, they end up spending considerably more than the original price of the item they bought.

Payday loans or cash advance loans – this type of debt is often the most TOP LAW FIRM dangerous, in that it appeals to people who may already be experiencing a lot of debt and are vulnerable. Payday loans promise a short-term loan without asking for a credit check. However, the interest rate is incredibly high. Therefore, once the loan is paid back, with interest, another loan is often needed because the individual does not have enough money left after paying back the first loan.

Gambling debt– debt incurred from gambling and gambling addiction is very serious. Often, the debt translates into credit card and loan debt. People with gambling addictions keep turning back to the gambling to pay off the debt. It becomes a vicious cycle.

Debt owed to CRA – common types of Canada Revenue Agency (CRA) debt include:

individual and corporate income tax

GST/HST remittances

benefit overpayments

defaulted Canada Student Loans

Employment Insurance overpayments and penalties

Canada Pension Plan overpayments

Personal loans – personal loans are most often used to purchase things such as:

home renovations

vacations

large ticket items such as appliances

Personal loans are attractive for a number of reasons, including:

they can be used for anything an individual wants,

they can be obtained relatively quickly,

they can be for large amounts,

they have fixed interest rates, fixed length of repayment and fixed monthly payments, and

the interest rate is almost always lower than a credit card loan.

Disability insurance, sometimes called disability income insurance, covers an individual for loss of income due to a disability, which may be due to a physical injury, an illness, or a psychological disorder. Because disability insurance is based on income replacement, you must be working to purchase it.

There are two main types of disability insurance available: Government insurance programs, and Private insurance plans. The type of plan a person has will affect their eligibility for benefits and the type and amount of benefits they will receive.

Government disability insurance programs

There are three government insurance programs available to working Canadians who meet the eligibility requirements and have paid the required insurance premiums.

Provincial insurance

In Ontario, the Workplace Safety and Insurance Board (WSIB) provides disability benefits to sick or injured workers. Most workers in Ontario are covered by Workplace Safety and Insurance. Your benefit entitlement, however, does not depend on whether your employer registers with the Board. If you are an employee covered by Workplace Safety and Insurance, you will be eligible to collect benefits if you have a work-related injury or disease which causes you to lose wages or to require medical treatment. Surviving relatives of a worker who dies in a work-related accident or from a work-related disease are also eligible to collect benefits.

Federal insurance

1. Employment Insurance (EI)

Federal Employment Insurance (EI) sickness benefits are available to workers who have paid EI premiums; and are unable to work due to illness or injury, or are quarantined.

2. Canada Pension Plan disability benefits

These benefits are available to people who have made contributions to the Canada Pension Plan (CPP), and whose disability prevents them from working at any job on a regular basis (includes benefits for disabled contributors and benefits for their dependent children).

Private disability insurance plans

Employer provided group disability insurance plans

Private group insurance plans are often provided by employers, but may also be available from unions or through associations. Group insurance plans provide disability coverage to employees (or individuals who are part of the union or association) who become disabled and are unable to work. Although employers often pay for the group disability insurance plans, employees may sometimes be required to contribute to the premiums through regular deductions from their pay. If your employer pays for the policy, your benefits will be taxable. If you pay for part or all of the premiums yourself, then you will not pay tax on that portion of benefits.

If your plan is fully employer funded, it is important to find out:

if you will continue to receive benefits if the employer ceases to do business (such as becoming bankrupt) and,

if you will continue to receive benefits until you get new coverage should you leave your job.

Private individual disability insurance plans

Individuals may also purchase their own private disability insurance policies. Individual policies are most often purchased from insurance agents, but in some cases, can also be purchased directly from an insurance company or bank. The two most common types of individual disability insurance purchased are short-term and long-term disability insurance.

Who should purchase individual disability insurance?

Whether an individual should purchase disability insurance and if so, how much, depends on a number of factors, such as:

if your employer does not provide disability insurance

if your employer provides insurance, but you do not feel the coverage is enough

if you are self-employed.

Individual disability insurance plans for self-employed individuals

Self-employed people can purchase individual disability insurance plans that provide income replacement as well as coverage for certain business expenses, such as overhead costs, deferred income taxes, and bank loans or interest on loans.

Benefits of private disability insurance

Individual insurance plans are bought for many reasons and provide a number of different benefits.

They provide the most complete and flexible coverage available because the individual can pick and choose the type and amount of protection they need; and

Unlike employer provided group coverage, FIND A ATTORNEY individual insurance plans do not end when you change your job or leave an association, they move with you.

Because you are the one paying the premiums for an individual policy with after tax income, should you need to make a claim the insurance benefits are tax-free. Premiums for individual disability insurance policies are usually more expensive than group coverage insurance premiums.

Types of coverage under private disability plans

The three main types of coverage available in most policies are sick leave, short-term disability, and long-term disability. Private disability insurance plans are provided by various insurance companies and can differ with respect to what type of coverage is provided, how much will be paid and for how long. The benefits provided by these plans also vary depending on the needs of the employer, or the individual.

Sick leave benefits usually provide full pay for a short time, such as a few days or a few weeks.

Short-term disability (STD) policies cover the loss of wages for a short period (usually up-to 6 months) after sick leave benefits run out. STD benefits are often paid for by the employer and included in the policy. However, some employers choose not to provide short-term disability benefits, and employees rely instead on government-funded Employment Insurance (EI) sickness benefits.

Long-term disability (LTD) coverage begins after short-term disability or EI benefits run out. As the name suggests, LTD benefits are paid for a much longer period of time, usually for up-to two years if the individual cannot work at their regular job. After two years, if the individual is unable to work at any job, they may be eligible to continue receiving benefits until age 65.

How much do private insurance disability benefits pay?

Employer provided policies

Employer provided disability insurance benefits generally replace 60% to 85% of an insured employee’s regular income, up-to a maximum amount, for a specified time.

Individual policies

For individual, private disability policies, benefits are pre-determined by the policy. The amount is based on a formula taking several factors into account, including the premium cost, percentage of gross income to be paid, and the maximum amount of benefits.

Can you collect more than one source of disability benefits?

Insured workers can receive benefits from more than one disability insurance plan at a time. However, any benefits you receive from one insurance plan can offset (reduce) income you get from another insurance plan. If you have multiple insurance plans and are collecting disability benefits, your total income from all the benefits will usually not be higher than 60% to 85% of your regular pay. In many cases, the amount of your long-term disability insurance benefits will be reduced as soon as you begin getting other sources of benefits, including government payments from CPP and WSIB.

Getting legal advice and help

If you have a long-term illness or injury that makes you unable to work, the benefits you may be entitled to depend on if you have insurance and what type.

If you do not have private insurance, but you were employed

If you do not have private insurance through your employer, or through your own private plan, you may be eligible to receive WSIB insurance benefits or EI benefits. Keep in mind that to be eligible for WSIB benefits the injury or illness must be work-related.

If you have private group or individual insurance

If you have disability insurance provided by your employer, or through your own private plan, you can make a claim for benefits either through your employer or directly with your insurance provider. To claim disability benefits under a group insurance plan or a private, individual insurance plan, your disability does not have to be as a result of an illness or injury that occurred on the job. It is important that your claim be submitted properly and in your best interests.

Debts incurred for investment

While it generally is not considered a good thing to have any debt, some types of debt are considered better choices than others. For example, a debt that is incurred to invest in your future is a usually considered a good financial decision, and better than taking on unnecessary debt to pay for depreciating goods.

Common types of debt that are considered to be an investment include:

Student loans – student loans may be considered good debt because an education is considered an investment in yourself and your future earning potential.

Business loans – investing in your own business is also considered a good debt because the intent is usually to make and grow a successful business and secure a strong financial future.

Mortgages – buying real estate is almost always considered a smart financial investment because the value of real property increases over the long term. Therefore, taking on a mortgage, which generally has a lower interest rate than other debt – such as credit card https://toplawyerlistcom.wixsite.com/findlawyers debt– is considered a good debt.

Other types of debt

Debts that are not considered good financial decisions are ones that will not contribute financially to your future. In many cases, people incur debt to purchase things that decrease in value, and things that are not necessary.

Credit card debt – one of the most common types of debt is obtained through credit cards. This is often considered the worst kind because it is far too easy to spend and carries the highest interest rate. Credit cards are used most often for daily expenses such as restaurants, entertainment and clothing. Interest rates charged by credit card companies are very high, and are payable when the monthly balance is not paid in full. Many people are only able to pay the minimum required payment each month, often taking years to pay off the debt. As a result, they end up spending considerably more than the original price of the item they bought.

Payday loans or cash advance loans – this type of debt is often the most dangerous, in that it appeals to people who may already be experiencing a lot of debt and are vulnerable. Payday loans promise a short-term loan without asking for a credit check. However, the interest rate is incredibly high. Therefore, once the loan is paid back, with interest, another loan is often needed because the individual does not have enough money left after paying back the first loan.

Gambling debt– debt incurred from gambling and gambling addiction is very serious. Often, the debt translates into credit card and loan debt. People with gambling addictions keep turning back to the gambling to pay off the debt. It becomes a vicious cycle.

Debt owed to CRA – common types of Canada Revenue Agency (CRA) debt include:

individual and corporate income tax

GST/HST remittances

benefit overpayments

defaulted Canada Student Loans

Employment Insurance overpayments and penalties

Canada Pension Plan overpayments

Personal loans – personal loans are most often used to purchase things such as:

home renovations

vacations

large ticket items such as appliances

Personal loans are attractive for a number of reasons, including:

they can be used for anything an individual wants,

they can be obtained relatively quickly,

they can be for large amounts,

they have fixed interest rates, fixed length of repayment and fixed monthly payments, and

the interest rate is almost always lower than a credit card loan.

Debts incurred for investment

While it generally is not considered a good thing to have any debt, some types of debt are considered better choices than others. For example, a debt that is incurred to invest in your future is a usually considered a good financial decision, and better than taking on unnecessary debt to pay for depreciating goods.

Common types of debt that are considered to be an investment include:

Student loans – student loans may be considered good debt because an education is considered an investment in yourself and your future earning potential.

Business loans – investing in your own business is also considered a good debt because the intent is usually to make and grow a successful business and secure a strong financial future.

Mortgages – buying real estate is almost always considered a smart financial investment because the value of real property increases over the long term. Therefore, taking on a mortgage, which generally has a lower interest rate than other debt – such as credit card debt– is considered a good debt.

Other types of debt

Debts that are not considered good financial decisions are ones that will not contribute financially to your future. In many cases, people incur debt to purchase things that decrease in value, and things that are not necessary.

Credit card debt – one of the most common types of debt is obtained through credit cards. This is often considered the worst kind because it is far too easy to spend and carries the highest interest rate. Credit cards are used most often for daily expenses such as restaurants, entertainment and clothing. Interest rates charged by credit card companies are very high, and are payable when the monthly balance is not paid in full. Many people are only able to pay the minimum required payment each month, often taking years to pay off the debt. As a result, they end up spending considerably more than the original price of the item they bought.

Payday loans or cash advance loans – this type of debt is often the most dangerous, in that it appeals to people who may already be experiencing a lot of debt and are vulnerable. Payday loans promise a short-term loan without asking for a credit check. However, the interest rate is incredibly high. Therefore, once the loan is paid back, with interest, another loan is often needed because the individual does not have enough money left after paying back the first loan.

Gambling debt– debt incurred from gambling and gambling addiction is very serious. Often, the debt translates into credit card and loan debt. People with gambling addictions keep turning back to the gambling to pay off the debt. It becomes a vicious cycle.

Debt owed to CRA – common types of Canada Revenue Agency (CRA) debt include:

individual and corporate income tax

GST/HST remittances

benefit overpayments

defaulted Canada Student Loans

Employment Insurance overpayments and penalties

Canada Pension Plan overpayments

Personal loans – personal loans are most often used to purchase things such as:

home renovations

vacations

large ticket items such as appliances

Personal loans Helpful hints are attractive for a number of reasons, including:

they can be used for anything an individual wants,

they can be obtained relatively quickly,

they can be for large amounts,

they have fixed interest rates, fixed length of repayment and fixed monthly payments, and

the interest rate is almost always lower than a credit card loan.