Protect yourself from the financial impacts of disabilities

No one likes to think about the worst-case scenario, yet it’s always something that is in the back of people’s mind. It’s why we invest in home and auto insurance – we may never need to use it, but it provides the peace of mind that if an accident occurs, we will have a financial safety net.

However, many have a blind spot when it comes to protecting their financial security – underestimating the chances of an illness or injury – putting their hard-earned savings in jeopardy. Just 45% of Canadians believe that disabilities occur frequently. The reality is that an estimated 1 in 5 Canadians over the age of 15 has some kind of disability, according to the latest findings from the Canadian Survey on Disability.

The fact of the matter is that illnesses and accidents happen every day, and 20% of the Canadian population is affected by a disability that limits their daily activities – including working to make an income. In these instances, relying on savings or using a crowdfunding platform as a financial safety net is neither practical nor sustainable.

Only a comprehensive insurance plan is able to provide the financial security necessary to fulfill financial obligations and maintain your standard of living if you’re faced with illness or disability that leaves you unable to work.

Myths vs. facts: Disabilities in Canada

First and foremost, it’s important to understand what a disability is defined as. It’s widely accepted by the government that a disability is “a medical or health problem that prevents or reduces a person’s ability to participate fully in society.”

A disability can be caused by an accident or an illness, though a quarter of Canadians believe an ailment is the result of not being careful. However, diseases such as cancer or MS, and mental illness are six times more likely to be the cause of a disability than a mishap. Age is also a factor when it comes to the occurrences of disabilities.

The same report from 2017 found that the prevalence of disability naturally increases with age. Only 13% of those aged 15-24 are affected, while 47% those aged 75 years and over had a disability. Additionally, age also correlates with which kind of disability respondents reported. The study found that older individuals were more likely to have a physical disability due to an illness or ageing, while injuries and mental health-related disabilities were most prevalent among the youngest age group.

Of working-age adults – classified in the survey as being aged 25 to 64 years of age – 20% had a disability. For this group, another statistic stands out: A quarter of them reported that their disability was work-related, typically due to an injury that occurred on the job.

The three groups identified in the latest Canadian Survey on Disability shows the differences in the cause of disability by age – but overall it highlights the importance of having a plan in place as these unexpected events could occur at any life stage.

The financial impact of the unexpected

When someone becomes disabled, the first priority should be planning a road for recovery or transitioning into a new normal. Unfortunately, the stress of paying medical expenses and compensating for a sudden loss of income can make the healing process much more difficult.

No one diagnosed with a disability should have to worry about how they will provide for themselves or their family while unable to work, yet one cannot ignore the financial impact of illnesses and accidents.

Consider this: The Canadian Cancer Society estimates that half of all people nationwide will be diagnosed with cancer in their lifetime – and most of these diagnoses will come for individuals over 50 years of age, still within the prime of their career and supporting their family. A cancer diagnosis is costly – a single course of treatment with newer drugs costs upwards of $65,000; that’s higher than the national median income. It’s no wonder that 85% of Canadians believe if they were diagnosed with cancer it would negatively impact their finances.

This is just one example of the costly impact of illnesses and injuries; however there is another aspect of a person’s financial future to consider when diagnosed with a disability: Income. Around 33% of Canadians will experience a disability that affects them longer than three months – meaning an extended amount of time an individual must rely on their savings or employment insurance (EI) to maintain their standard of living.

Paying for utilities, groceries, credit card bills and education can be overwhelming when you’re unable to work. It’s estimated that even if you saved 5% of your income for 10 years, that entire amount could be wiped out by just six months of disability.

What about government and employment insurance?

Often, Canadians believe that they will be covered for the costs of a disability through a government health plan or employment insurance – but both of these plans have limitations. For instance, EI is only available to Canadians who have paid into it, and provides payments to individuals who are unable to work – due to no fault of their own – for a maximum of 15 weeks. Furthermore, it only supplements up to 55% of lost income, to a maximum of $562 a week. Worker’s compensation is also never a guarantee, as the claims process can be extremely complicated. In addition, many claims are denied and Canadians are only eligible if they have disabilities stemming from accidents that happen on the job.

Government health coverage also comes with caveats. The Canadian Pension Plan (CPP) provides disability benefits only to those who have made enough contributions to the CPP – and even that can only amount to a few thousands dollars in total. Ultimately, you may only receive a few hundred dollars from CPP a month if you meet their restrictive definition of a disability – it must be both “severe” and “prolonged” to qualify. Provincial plans, like OHIP, can cover medical expenses but do not supplement living expenses.

Ultimately, government and employer insurance plans lack the comprehensive coverage you would need if you were to become disabled for even a few months.

How private insurance can help

A benefit plan can cost as little as a cup of coffee per day and protect your earning power for your entire working career. With The Edge Benefits, crafting a benefit plan is straightforward and affordable so you can have the peace of mind that your finances are safe if you’re ever faced with an unexpected accident or illness.

Our Income Replacement Benefits (also known as Disability Insurance or Loss of Income coverage) provides you with an income when you can’t work due to an injury or illness. We have revolutionized disability income replacement within Canada by offering flexible plan designs, including guaranteed-issue injury coverage and a simplified, streamlined process to qualify for illness insurance. You can complement this coverage with Critical Illness Insurance that provides a lump-sum benefit in the event of a critical illness diagnosis.

Every working Canadian should be financially protected from the cost of a disability. Get a free quote for disability coverage today from The Edge Benefits.

Sources

https://www150.statcan.gc.ca/n1/daily-quotidien/181128/dq181128a-eng.htm
https://www.canada.ca/content/dam/esdc-edsc/migration/documents/eng/disability/arc/reference_guide.pdf
https://www150.statcan.gc.ca/n1/pub/89-654-x/89-654-x2018002-eng.htm
https://www.cancer.ca/en/cancer-information/cancer-101/cancer-statistics-at-a-glance/?region=on#:~:text=Based%20on%202015%20estimates%3A,expected%20to%20die%20from%20cancer
https://www.canada.ca/en/financial-consumer-agency/services/living-disability/disability-benefits.html
https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-disability-benefit.html