You run your own business and have no employer coverage.
Why it fits: Disability insurance replaces your income so you can pay bills and keep your business going while you recover.
Disability Insurance
Protect your income if illness or injury keeps you from working.
Disability insurance pays you a monthly income if an illness or injury stops you from working. When you pay the premiums yourself, the benefits are generally tax-free in Canada.
Overview
Disability insurance pays you a monthly income if an illness or injury keeps you from working. It helps you pay the mortgage, groceries and bills while you focus on getting better.
Most people insure their home and car, but forget about their ability to earn a paycheque. Yet a serious illness or injury can happen at any age, and a long time off work can drain savings quickly.
When disability insurance makes the most sense
If you depend on your income to pay your bills, disability insurance is worth considering. It is especially important for the self-employed, people without workplace benefits and professionals whose careers depend on specialized skills. If you have a group plan, an individual policy can top it up and stays with you if you change jobs.
Choosing a policy
When comparing disability policies, look at more than the premium:
- Definition of disability: does the plan cover your own occupation, or only any occupation?
- Waiting and benefit periods: balance the length of the wait and the length of the benefit with your budget.
- Insurer strength: we compare plans from Canada’s leading insurers to find the right fit and price for you.
How it works
- 1
Choose your monthly benefit
Pick a monthly amount based on your income. Insurers usually limit coverage to a portion of what you earn.
- 2
Set your waiting and benefit periods
Choose how long you wait before benefits start, such as 30, 90 or 120 days, and how long they can last, such as 2 years, 5 years or to age 65.
- 3
Pay your premium
Your premium depends on your age, health, job and the options you choose. A longer waiting period usually means a lower premium.
- 4
Receive monthly income
If you cannot work because of a covered illness or injury, you receive a monthly benefit after the waiting period ends.
Key benefits
Protects your biggest asset
Your ability to earn an income over your career is worth far more than your home or car. Disability insurance protects it.
Tax-free benefits
When you pay the premiums personally, individual disability benefits are generally received tax-free.
Own-occupation options
Some plans pay if you cannot do your own job, even if you could work in a different one.
Partial disability benefits
Many plans pay a partial benefit if you can return to work part-time or earn less while you recover.
Coverage that follows you
An individual plan stays with you if you change jobs or start a business, unlike most group plans.
Optional riders
Add cost-of-living increases, future income increases or a return of premium rider to tailor your plan.
Who it’s for
You are a dentist, nurse or electrician whose work depends on specific skills or physical ability.
Why it fits: Own-occupation coverage pays if you cannot do your own job, protecting the career you trained for.
Your workplace plan covers only part of your income, and the benefits are taxable.
Why it fits: An individual plan can top up your coverage and stays with you if you leave your job.
Pros & cons
Pros
- Replaces income when you cannot work
- Benefits are generally tax-free when you pay the premiums
- Coverage can be tailored to your job and budget
- Individual plans stay with you if you change jobs
Things to consider
- Premiums can be high for some jobs
- Benefits replace only part of your income
- Pre-existing conditions may be excluded
How it compares
| Individual disability insurance compared with group coverage | Individual Plan | Group Plan |
|---|---|---|
| Who owns it | You | Your employer |
| Portability | Stays with you when you change jobs | Usually ends when you leave your job |
| Tax on benefits | Generally tax-free when you pay the premiums | Taxable if your employer pays the premiums |
| Definition of disability | Can include own-occupation coverage | Often switches to any-occupation after 2 years |
| Customization | Choose your benefit and options | Set by the employer plan |
Run the numbers
Disability incomeFind out how much of your paycheque is protected if you cannot work due to illness or injury.Frequently asked questions
What is the difference between own-occupation and any-occupation?
Own-occupation coverage pays if you cannot do the main duties of your own job. Any-occupation coverage pays only if you cannot work at any job that suits your education, training and experience. Own-occupation costs more but is easier to claim.
What is an elimination period?
It is the waiting time between when your disability starts and when benefits begin, often 30, 90 or 120 days. A longer wait lowers your premium, so many people match it to their emergency savings or sick leave.
I already have group disability at work. Do I need more?
Group coverage is a great start, but it often replaces only part of your income, is taxable if your employer pays for it, and usually ends when you leave. An individual plan can fill those gaps.
What about Employment Insurance and CPP disability?
EI sickness benefits are short-term, and CPP disability has strict rules and modest payments. Most people find these programs are not enough on their own to cover their bills.
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Get the best rate on Disability Insurance
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