A helpful guide to understanding the various types of government and work disability insurance programs, and what they mean to you. Plus, learn how you can stay fully protected when that coverage is not enough.
What is disability insurance? Is it really worth it?
Disability Insurance is often overlooked, yet it’s an important piece of our financial security. With the right coverage, you can be covered for the full amount of your pay should you need to take time off work due to an injury or illness, including mental illness.
The Unavoidable Truth
Typically, work and government insurance plans only cover a percentage of your income, but with adequate insurance you may not have to sacrifice any portion of your net income.
Stat: Nearly half of all working Canadians have experienced a mental or physical illness that required them to take time off work.1
Stat: Statistics show that when a disability extends beyond 90 days, its length averages between 2.1 and 3.2 years.2
Avoid a Smaller Pay Cheque
Stat: Canadians between the ages of 25–54 earn an average income of $54,400.3
Stat: Many employer plans cap benefits at 50–75% of your income.4
Defining the Terms
STD: Short Term Disability is a partial benefit provided by most employer insurance plans. Your HR department will be able to tell you how and when you’re covered.
LTD: Long Term Disability is a partial benefit which may or may not be included in your employer’s insurance plan and is capped after a certain amount. Your HR department will be able to tell you how and when you’re covered.
EI: Employment Insurance is a government program which offers temporary financial assistance at 55% of income up to a capped amount for a maximum of 15 weeks.
CPP Disability: Canada Pension Plan Disability provides partial income replacement to eligible CPP contributors under the age of 65 who have a disability that is both severe and prolonged.5
You Have the Ability to Take Matters into Your Own Hands
Statistics show that unexpected illness or injury can hit even the healthiest of us. Don’t wait until it’s too late to determine how well you’re covered against a potential disability.
You can find the right plan to keep you in good financial shape while you work to get yourself back on your feet here or speak to an RBC Insurance advisor about your options.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.