From The Wealthy Barber: "Disability insurance is the most neglected of all forms of insurance, yet for many people, it’s the most critical insurance need…. A thirty year old has a one in four chance of becoming disabled for one year or more at some point in his or her life…When people are disabled, they don’t just cease to be an asset to their families…they become a liability."
Disability Insurance a necessity
What would happen if you were suddenly disabled in some way, and unable to continue your regular work or activity? What if you no longer had an income to meet ongoing expenses? How would this loss affect your dependants?
Disability strikes far more frequently than premature death. Temporary or long-term disability can happen at any age. It can come suddenly from an accident, or severe mental or physical illness, or develop over time. A third of all people now aged 35 will be unable to work for at least six months before reaching age 65.
Having adequate disability insurance is crucial. It can mean the difference between low-income future employment, and having the funds needed to prepare for a new career. Your family can be financially ruined, or financially secure.
Adequate disability insurance should be a part of your financial plans, for yourself and for your family.
Your chances of becoming disabled
People under 65 years of age are twice as much likely to become long-term disabled than to die due to accident or illness. Of course the chances of becoming disabled gradually raises with age:
- 3 in 100 children up to 14 years of age become disabled
- 4 in 100 young adults between 15 to 24 become disabled
- 7 in 100 adults between 25 to 44 become disabled
- 17 in 100 adults between 45 to 64 become disabled
- 40 in 100 adults 65 and over become disabled
- 53 in 100 adults over 75 reported disability
At the moment 14 in 100 Canadians (4.4 million) are classed as disabled.
What are the benefits of the disability insurance?
Different types of insurance were created to fit the various needs and situations one might encounter. Life insurance, for instance, is offered to provide sufficient money coverage for those that are hit by the sudden loss not only emotionally, but also financially. On the other hand when a person becomes (totally) disabled, not only the person is not fit to maintain sufficient income for themselves and their family, but on the top of that the extra medical and other care for this person takes even more money out of their pocket, or the pocket of their family that has to provide the extra care for the once self-supporting.
Therefore the disability insurance is often more important than the life insurance.
Being classed as disabled doesn’t necessary mean that the person is not able of some kind of employment, but it has been reported that around 15% of those filing for bankruptcy have done it due to illness or accident. As disabled, you are eligible to receive some government benefits, but they are very limited. The coverage group plans won’t match your current income either: they mostly cover only 50% to 60% of your net income.
When deciding whether to apply or not for the disability insurance, consider your options in case you become limited in earning a sufficient income. You could:
- rely on your spouse/family income
- use your savings or retirement funds
- sell your property/other assets
- live on credit
- be sufficiently covered by disability insurance that would supplement the missing income
It makes sense to seriously consider Disability Insurance to compliment your Insurance Portfolio, as it is arguably just as important to the success of your family’s financial plans as Life Insurance would be.
Call our office today to see how this may fit into your Protection plans, or email us for a no obligation quote to see how this fits in with your current plans.