Long Term Disability Insurance Rates For Canadian Consumers

Long term disability insurance rates will vary, depending on the type of coverage you buy.

Long Term Disability Insurance Rates For Canadian Consumers

Coverage is well worth considering for those times that creep up unexpectedly.

Not having insurance can leave you in a panic, not knowing how to pay the bills while not being able to work.

Statistics show that a disabling accident that happens on average, every second.

Nearly a third of workers are going to find themselves disabled at some time before they reach the age of retirement, according to a 2009 study.

Do You Know the Disability Laws?

Read our article on Disability Insurance Laws in Canada

An alarming fact is that many employees are part-time and therefore not covered by a long term disability insurance policy.

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There are some social insurance benefits available to a small percentage of disabled workers, but there is only a 30 to 40 percent payout of the person’s wages.

Long term disability insurance rates may seem expensive, but the payout can make up a large part of that lost income.

For example, a healthy male at 35 years of age, earning a $100,000 annual salary, is able to purchase a long term disability insurance policy that gives them an annual $60,000 benefit until he reaches the age of 65. The cost of premiums in this case would be around $1,350 per year.

Check Your Options for Income Protection

Short-term disability versus long term disability insurance rates are very different.

Short-term disability, sometimes called sick leave, begins the minute you are no longer able to work. The reasons are generally pregnancy, illness or injury.

Many employers offer this short-term coverage, but much fewer offer a provision for long-term disability. This leaves an astounding number of people without coverage if something were to happen and they are no longer able to work.

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Be aware of what you have. It is very important to know what short-term disability coverage you have before researching long term disability insurance rates. Every policy includes an 'elimination period'.

This means the length of time from when you became disabled until the time that the benefits begin. Look at this the same way that you would any other insurance deductible. Higher premiums are not worth it if your waiting period is 30 days, especially if you only have a short-term, six-month coverage period.

Be aware of how much you need. A long term policy will typically last for a certain set amount of years or until you are at the age of retirement. The shorter time of the period of benefits, the lower the premium will be. It is also important to check and see if you will still have coverage if you have to leave your place of employment. Being able to take your policy with you is called a portable policy.

Know how much coverage you may need. The typical long term disability group plan can replace as much as 60 percent of your wages. If you have an employer who pays a portion or all of the premiums, this option is best to begin with.

To easily check online go to http://www.lifehappens.org/disability-insurance-needs-calculator/ This is an easy way to see how much you need in disability insurance, regardless of whether you already have work coverage.

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This site helps evaluate how far you can depend on your own cash in order to support yourself when the short term benefits have run out. It shows how long you are able to get by if you do not purchase any additional disability insurance.

Check Your Group Plan Carefully

Group plans have drawbacks. A group plan will generally only cover a salary. Commissions and bonuses are not included and many sales people depend on those. There are certain group plans with a cap of $5,000 per month or an annual cap of $60,000. If you are paying premiums on the pre-tax basis out of your paycheck, you will have to pay the taxes later on a benefit payout.

Your Age matters. A younger worker should check out long term disability rates with an agent before they buy insurance through an employer's group plan. In an individual market, the status of health and age dictate the amount of your long term disability insurance rates.

Be sure to read all the fine print. You need to make sure that you understand what the difference is between "any" and "own" occupation. A recommended policy by Consumer advocates is a policy that steps in when you can no longer do your specified job, rather than any work.

This type of insurance is called "own-occ", and is not as desirable. It is based on you not being able to do any work regardless of your education, training and experience.

Protecting yourself is crucial. You need to be sure that your policy cannot be cancelled. This type of long term disability insurance is called "non-can". Also, be sure that there is a guaranteed renewal at the same long term disability rate you have been paying.

Illness AND accidents happen. There are policies that only cover accidents and do not cover illness.

Many people think a serious accident is the main reason a person goes on long-term disability, but chronic illness is usually the reason. Only about 9 percent of the people who claim long term disability benefits are unable to work due to injury.

What You Should Look for in Long Term Disability Insurance Rates

  • Never forget to enquire about riders. Riders for a future option to purchase and cost of living adjustments will allow you to be able to have your coverage increased as you earn more income. You do not have to reference medical records or have another physical examination.
  • Never purchase a policy before you check how financially strong the insurer is. Check with a major credit-rating agency that offers reports on companies.
  • Do not just go along with an insurance company’s decision about how much coverage you need. People with changeable incomes might want more coverage as their salary increases.
The bottom line is that everyone needs to be prepared in case of illness or injury. Looking into long term disability insurance rates is the first step towards a more secure future.

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