Supplemental Disability Insurance
Supplemental disability insurance fills the majority of the gaps left in a group disability insurance plan. Group disability insurance (also called employee disability insurance and group offset) is a good starting point for coverage but there are many limitations in the coverage. Some of which are summarized below.
As you read the many limitations of employee disability insurance plans give some thought to learning about all of this after you are disabled and it is too late to fill the gaps.
Limitations of Group Disability Insurance Include:
Benefit amount: Most plans have a limit of 65 per cent of income. Some are even lower.
Maximum Limit Most plans have a maximum limit of coverage with respect to income. Many plans are as low as $2000. If you earn $4000 per month you will not even get 65 per cent ($2600) due to the limit of $2000.
Is it a Taxable Benefit? If your employer pays for the benefit it will likely be a taxable benefit to you. If you are receiving 65 percent of your income and tax comes off that – how will you survive financially?
Elimination period How long do you have to wait to get your benefit? Your plan may start 120 days after you become disabled. Can you wait that long for coverage?
Definition of Disability What if your coverage has a restrictive definition of disability? Most group disability insurance plans do have a restrictive definition. Imagine if your disability prevented you from doing your job but your insurer was able to tell you that you were able to work in a different kind of job. Your benefit would end, regardless of job availability.
Inflation Protection Many group plans do not have Cost of Living Adjustments (COLA) in them. Do you want your already limited purchasing power to erode year after year?
Partial or Residual Disability A supplementary disability plan can include group offset.
What If Your Employer Cancels The Group Insurance? Your group offset private disability insurance plan will have you covered if you lose your group insurance for any reason.
Supplemental Disability Insurance can fill all of these gaps and limitations. And it’s not that expensive since there is coverage in force already.
Leave Supplemental Disability Insurance and return to Disability Insurance Canada
Concerned about Heart Attack Cancer and Stroke? Consider Basic Critical Illness Insurance as an additional supplement to your group disability plan
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