Disability Insurance

You insure your home because it is an asset. You insure your car because the coverage is important to you and your family. Why do most families under-insure their most valuable asset…their income? To put this into perspective an individual who makes $50,000 per year could have potential losses of $500,000 over 10 years, or $1,000,000 over 20 years (not including inflation or salary increases) if you became disabled and unable to earn an income.

Percentage of people who will become disabled for at least 90 days prior to age 65 and average duration of disability:

30                   42%                       2.7 years
40                   37%                       3.3 years
50                   28%                       3.3 years


If you became disabled and unable to earn an income for 6 months or longer, what would you do to replace your lost income?

  • RRSP and personal savings: Did you know that if you saved 5% of your income each year it’s possible that you could wipe out 10 years of savings in just 6 months? Would a withdrawal from savings affect your financial independence in your retirement years?
  • Loans and credit: Many banks are reluctant to lend money to someone without an income and if they did, may impose harsh loan terms and conditions. i.e. high interest rates, high monthly payments.
  • Spousal income: Could your family maintain its standard of living based on one income alone, in the face of potential higher costs such as child care, medical and home modifications?
  • Sale of assets: What would the consequences of having to sell your home or other assets? Would you receive fair market value?

Disability insurance can help with one of the most fundamental elements of financial planning by providing a regular flow of cash if you become disabled. It can help you meet everyday living expenses and protect the standard of living you and your family are used to.