Full-time Canadian workers are oftentimes given the option to contribute to long-term disability plans offered by their employers. These plans are designed to protect employees who are injured on-the-job. This form of insurance is only available to part- and full-time workers when it is offered by their employers.
So, What exactly is disability insurance? What does it cover? How does it payout? Find the answer to these questions and much more in the article below.
What Is Disability Insurance?
Disability insurance is a type of insurance plan that covers workers who sustain minor or major workplace injuries. These insurance plans are fairly affordable and deducted weekly or bi-weekly from the worker’s wages. Most companies tend to offer disability insurance to all their new-hires. Never ignore this offer because it could protect you from going belly up if ever you are injured on the job.
What Does Disability Insurance Cover?
Disability insurance generally kicks in a few weeks after the injured worker files a claim with their employer’s insurer. The initial payment may not arrive until after you receive your last paycheck. This will give the insurer enough time to investigate and process your claim. There should not be a long gap between your last paycheck and the first disability payment.
The main purpose of employer disability insurance is to protect injured employees financially until they are cleared to return to work.
Canadian Workplace Injury Statistics
According to the Association of Workers’ Compensation Boards of Canada IAWCBC), 977 workplace fatalities were reported in Canada in 2012. Luckily for these workers, they were covered under Worker’s Compensation. It is unclear whether or not these workers were covered under employer disability insurance.
Between 2000 and 2012, 22% of workplace fatalities were reported by companies in the Canadian construction industry. Another 19% were reported in the Canadian manufacturing industry.
Regardless of which industry you work in, you could be involved in a workplace injury at the drop of a hat. This is why disability insurance is so important to Canadian workers.
Long-Term Disability (LTD)
Long-term disability insurance, more often referred to as LTD in the workplace, covers workers injured on the job. Long-term disability coverage is different than the short-term disability plan. Long-term disability generally pays out until the injured worker is approved for Canadian disability benefits.
Short-term disability insurance generally kicks fairly quickly after the injured employee submits a claim. This coverage is exactly what its name entails, it is short-term, so it will not last forever. Most short-term disability plans will not last longer than three years.
Long-term disability plans, on the other hand, will pay out for five to 10 years. However, some plans will pay out until the injured worker starts receiving Canadian retirement benefits.
What Is The Difference Between “Own Occupation” And “Any Occupation?”
Every worker is at risk of workplace injuries, which is why they should be familiar with employer disability insurance. Two terms you definitely should know are “Own Occupation” and “Any Occupation.” What exactly do these important terms mean? What roles do they play in employer disability insurance?
First and foremost, both terms are extremely important when it comes to disability insurance. Own Occupation pertains to injured workers who are not cleared to work any type of job. Any Occupation pertains to injured workers who are cleared to return to work, even if it is not their normal position. For example, Joe fell from a ladder at his workplace. He was transported to the hospital where had to undergo an operation to repair a fractured femur. Joe was covered under his employer’s disability insurance. His disability benefits kicked in several weeks following his injury while he was unable to work. Joe’s physician later determined he could return to work but not to his normal position. Joe is cleared to work a desk job, so he will no longer receive disability payments.
So, you see both of these terms are crucial parts of employer disability benefits. Any Occupation disability plans cover workers who are deemed disabled and unable to work any type of job. This coverage allows disabled workers to remain off work for the rest of their lives while receiving regular disability benefit payments.
Critical Illness Insurance Plans
Another insurance plan offered by some Canadian employers is known as Critical Illness or CI. This policy is specifically designed for part- and full-time workers. Unfortunately, not all companies offer this insurance benefit option to their employees. Those who are fortunate to have this option will definitely appreciate it if ever they are diagnosed with a critical illness while working part- or full-time.
Critical insurance is a must for all Canadian workers. Like workplace injuries, workers are subject to medical conditions both minor and majors. Do not think just because you are still young, you will not get sick. Even though your risks are lower than the workers over the age of 45, you are still at risk.
CI works slightly different than LTD insurance. Both are designed to protect workers from financial collapse in the event of a workplace injury or critical illness diagnosis while working, they have some differences.
Unlike LTD benefits, CI benefits are paid out in one lump sum. CI benefits are not taxed by the Canadian government. So, the sick worker receives the full amount without monetary penalties.
It is always in a worker’s best interest to carry both of these policies because there are risks of both illness and workplace injury.
You can utilize your CI lump-sum payment to pay off debt or put it aside for your children’s education. There are laws that regulate what CI payments are utilized for, so they can be utilized as the ill worker sees fit.
Do You Have Enough Disability Insurance Coverage?
Every part- or full-time worker needs to determine if their employer’s disability plan is enough in the event of a workplace injury. It cannot be stressed enough the importance of knowing everything about your insurance coverage, as well as the terminology.
If you have concerns about your existing disability plan, you can always rely on the experts at ProfessionalsCoverage. You will be connected directly to an experienced agent to determine if your coverage is adequate. Even if you just have a few questions about your policy, ProfessionalsCoverage is here to help.
If it is determined your existing employer disability coverage is lacking in any way, private disability insurance may be the solution.
Another important factor to consider is the payment amount. This is so important because some employer disability plans do not pay the full amount of an injured worker’s wages. This basically means the injured workers will not receive the same amount of money as if they were working full-time.
It is not unusual for an employer’s disability plan to only payout 50% of the injured worker’s gross income. This alone could cripple the injured worker’s finances. This would put the injured worker at risk of losing his home, vehicles, and other assets.
All workers should consider supplemental private disability coverage.
How Long Do Disability Benefits Pay Out?
There is no set deadline for disability benefits period because they vary from one employer to another. However, popular disability plans will pay out for a period of 1 year, 2 years, 5 years, and till age 65 until the disabled worker reaches retirement age or is declared deceased, whichever comes first. Elimination period or the waiting period must be satisfied before the policy starts paying the monthly disability income benefit.
Smaller companies generally do not offer either CI or LTD insurance coverage. These workers are eligible for disability through private insurance. To learn more contact a ProfessionalCoverage agent.
Self-employed workers also qualify for LTD and CI insurance through private insurers. Workers can never have enough insurance coverage. In this case, two plans are better than one.
One thing to note is that a corporate disability plan has some pros and cons. Unfortunately, this type of plan means that the payments are going to be taxed. So, you’ll receive assistance but you’ll have to pay some of that money into the government. This is why many Canadians are making the switch or adding additional coverage with a private disability insurance plan. With a private disability plan, the payments are tax-free meaning you’ll be able to spend all of the money however you feel is necessary.
Since the payments are not taxed, you’ll receive all of the money and you won’t have to pay some into the government. While you should take advantage of your employer’s corporate plan, you’ll want to consider adding more income protection with a private plan too. This combination will provide you with greater assistance when you need it the most.
ProfessionalsCoverage Has You Covered
Having a disability insurance plan is great for giving you extra peace of mind since you never know when you’re going to get injured or sick. Remember that private disability insurance payments are tax-free but corporate plan payouts will be taxed. With that being said, it would be wise for all Canadians to have a private disability insurance plan. Having this coverage could provide you with the assistance you need if you experience an unthinkable accident.
ProfessionalsCoverage is here to aid you. We can help you find the insurance plan that is going to work best for you and your family. Contact ProfessionalsCoverage so you can find a good insurance agent and get covered before while you are in good health!
Types of Disability Insurance we offer
- Long-Term Disability Insurance (LTD)
- Short-Term Disability Insurance
- Key Person Disability Insurance
- Self Employed Disability Insurance
- Mortgage Disability Insurance
- Temporary Disability Insurance
- Supplemental Disability Insurance
Other Disability Insurance Resources that you can read
- Are Canadian Disability Insurance Premiums Tax-Deductible?
- Will My Long-Term Disability Income Be Taxable?
- Dealing With Elimination Periods For Short And Long-Term Disability Insurance
- Pregnancy And Disability Insurance
- Who Pays For Disability Insurance?
- Why Employers Offer Disability Insurance
- Maternity Leave And Disability Insurance Benefits
- How Long Do Long-Term Disability Benefits Pay?
- How Much Does Long-Term Disability Insurance Cost?
- Is Disability Insurance Worth It?
- How Much Disability Insurance Should I Get?
- What Does Disability Insurance Cover?
- What To Look For In Disability Insurance?
- Do I Need Disability Insurance After I Retire?
- Does Disability Insurance Cover Pre-Existing Conditions?
- How Does Disability Insurance Work?
- How Long Does Long Term Disability Insurance Pay?
- Is Wage Loss Insurance The Same As Short Term Disability?
- When Does Long Term Disability Insurance Start?
- Can You Buy Your Own Short Term Disability Insurance?
- Can You Get Disability Insurance If You Are Unemployed?
- Can I Buy My Own Short-Term Disability Insurance?
- Can You Get Individual Short Term Disability Insurance?
- Are Credit Cardholders Insured By Disability Insurance Plans?