Top 5 Best Disability Insurance Companies in Canada
What are the best disability insurance companies in Canada? Read to learn more!
13 minute read
Originally published: January 3, 2023
Updated: September 9, 2024
Top 5 Best Disability Insurance Companies in Canada
What are the best disability insurance companies in Canada? Read to learn more!
13 minute read
Originally published: January 3, 2023
Updated: September 9, 2024
Life insurance is something most people know they need to safeguard their loved ones in case something happens to them. However, many people fail to fully appreciate the value of disability insurance. If you and your family depend on your income from employment to maintain your standard of living, disability insurance is essential. Although programs like Workers’ Compensation, EI, and others offer disability insurance, they don’t provide enough protection. Continue reading to find the best disability insurance in Canada!
In this Article:
What is Disability Insurance?
If an illness or injury prevents you from working, disability insurance can provide you with a tax-free monthly payment to replace your income and help pay for your costs of living. While a disability is frequently visible to the naked eye, not all disabilities are. Chronic pain or a mental health problem might also be considered disabilities.
Disability insurance can help protect you and your family in the event of an unexpected sickness or injury that prevents you from working and earning an income. In general, disability insurance covers between 60% and 85% of your usual income for a set period of time if you:
- Temporarily can’t work or,
- are permanently disabled
Disability insurance and critical illness insurance can also be commonly grouped together or confused with each other, but the key difference is the areas that they cover and the payout they provide. Critical illness provides a lump sum payment upon the diagnosis of a covered critical illness of your policy, and disability insurance provides monthly payments when you cannot work.
If you’re not sure if disability insurance is right for you, check out our guide!
For a more detailed review of disability insurance in Canada be sure to check out our guide on disability insurance where we go into details about what exactly this insurance is and covers.
How Does Disability Insurance Work?
The process of getting disability insurance and receiving your benefits often looks like this:
- Tailor your coverage, select the amount you need and add optional perks.
- Pay your monthly premium.
- File a claim if you become disabled.
- When the waiting period is up, you will receive your monthly payments. The waiting period is the number of days between the date you became disabled and the start date of your benefits.
- When your benefit period expires or you return to work, your payments will end.
Although the process is similar across most companies, it’s still important that you find the best disability insurance product for your needs and budget.
Short-Term Disability Insurance
While you’re ill or injured, short-term disability insurance normally pays benefits for up to 6 months.
Your claim must be submitted through your disability plan if your company has a short-term disability policy. Paid sick leave is not a requirement for employers, and they are all different.
Long-Term Disability Insurance
Every disability plan is unique. In some cases, if you are unable to return to the employment you held prior to becoming disabled, you may be eligible for disability benefits for up to two years. After two years, receiving benefits is only possible if you are unable to work at any job.
Benefits from long term disability insurance often start after the following benefits expire:
- short-term disability insurance
- benefits from your employer’s sick leave
- EI benefits
60% to 70% of your regular income will often be replaced by most long-term disability policies.
Importance of Disability Insurance
Up to 40% of Canadians may experience a disability lasting 90 days or longer before they are 65, so it’s more common than you think. Furthermore, DI helps make up a significant portion of your paycheque. You could get as much as 80-90% of your salary. With disability insurance you can safeguard your retirement funds. By protecting yourself with this type of insurance, you can reduce the likelihood that you’ll need to tap into your retirement resources to meet your financial commitments. Finding the best disability insurance to cover your costs while you’re disabled or unable to work for a period is crucial.
Best Disability Life Insurance Companies in Canada
The best disability insurance companies in Canada are:
1. Canada Life
Canada Life is well regarded because of the flexibility it provides through its many optional riders. In addition, they have affordable rates for people who don’t work in highly specialized fields like office workers with desk jobs or some minor manual task. The great majority of professions and employment arrangements are covered by the two disability plans that Canada Life provides. Canada Life has a disability insurance plan for you whether you’re just starting out on your own, need coverage because your employer doesn’t have any, work several jobs, or are in another special circumstance.
Pros
- Maximum monthly benefit for high-earners is $25,000, which leads the industry.
- Own occupation available for 3A and 4A category job class.
- You can choose from a variety of riders including Accidental Death & Dismemberment and catch up rider option.
- One of just two insurance providers that offers a non-cancellable contract.
- Professionals in the healthcare industry receive discounts.
Cons
- Prices for professional job categories are a little higher.
- Many might be discouraged by the long underwriting procedure.
- Limited future income option amount and COLA rider benefit amount.
For a full review of Canada Life check out the following: Canada Life Insurance Review
2. Desjardins Insurance
For employees, the self-employed, and business owners, Desjardins Insurance provides a variety of disability insurance packages. Your plan can be modified by selecting the monthly benefit amount, additional optional riders, and other factors. You can quickly apply with Desjardins using an electronic application that takes only a few minutes to complete.
Pros
- One of the few insurance providers that offers disability insurance for loans to pay your home, auto loan, and other debts.
- Free assistance options including 24/7 phone support to speak with a nurse about any medical issue are available.
- Multiple rider options are available.
Cons
- Does not provide non-cancellable disability insurance with guaranteed, stable premiums.
- Prices for professional job categories are a little higher.
- For wealthy incomes, a maximum monthly benefit of $10,000 might not be enough.
For a full review of Desjardins insurance check out the following: Desjardins Life Insurance Review
3. Manulife
Manulife offers coverage specifically designed for professionals, executives, recent graduates, and has add-on choices to cover you when you are unable to work in your specialized sector, but all the extras will cost you more money. The premiums for the three disability insurance plans vary because of the different benefits they offer. The cost is also influenced by your age, gender, smoking status, occupation, and plan design, among other things.
Pros
- Upon retirement, you can change your policy to a long-term care policy via the Future Care Option.
- Dentists are only given a better occupation class of 4A by Manulife, whereas all other insurance providers describe dentists as having an occupation class of 3A.
- Without any supporting medical documentation, the Automatic Coverage Enhancement raises your disability compensation each year by 3% or 5%.
- Even for occupation classes 3A that have been elevated to 4A, own occupation riders are available.
Cons
- Costly in comparison to similar products on the market.
- Typically lengthy processing periods for applications.
For a full review of Manulife insurance, check out the following: Manulife Life Insurance Review
4. Humania
A variety of disability insurance plans are available from Humania Assurance, and they can be used to pay off debts or replace lost income. Your employment position, health, income, debt, and line of work all affect which plan you ultimately qualify for.
Pros
- Although premiums may go up in the future, they are locked in for the first five years at current value.
- No profession is off-limits, not even those with potentially dangerous working conditions or unstable salaries.
- The availability of critical illness and life insurance riders as add-ons to guaranteed products.
Cons
- If you have a preexisting condition, getting insurance may be difficult due to the in-depth medical underwriting procedure.
- Monthly benefit maximum of $6000.
For a full review of Humania insurance check out the following: Humania Life Insurance Review
5. RBC
A broad range of disability insurance products covering a diverse demographic are offered by RBC Insurance. With optional riders, you can enhance your policy’s coverage. Applying for disability benefits is quick and simple with an electronic application.
Pros
- Those in need of disability protection can turn to RBC Insurance for a variety of options. Disability insurance riders are a great way to tailor your policy to your specific needs.
- Applying for disability payments is simplified via an online application.
- RBC Insurance is unable to unilaterally raise your premiums, change or cancel your coverage because it is a non-cancellable policy.
Cons
- Only certain jobs can use the own occupation rider.
- Contains no premium refund rider.
- It might cost more for lower occupational classifications.
For a full review of RBC insurance check out the following: RBC Life Insurance Review
Frequently Asked Questions (FAQs) about Disability Insurance
If you become too ill or injured to work, disability insurance offers a portion of your income so you can cover your expenses. Disability affects more people and occurs more frequently than you may imagine. In actuality, illnesses—including common disorders like heart disease and arthritis—are the leading cause of impairments.
Some employers provide their staff with short- and long-term disability insurance. In the immediate aftermath of an incident, a short-term policy can be helpful, while a long-term coverage can help give financial security for disability that could persist for years. In order to help give additional financial security, you can also pay for supplemental coverage on top of the benefits you receive at work.
You might be able to purchase disability insurance from your workplace, from a group or association of professionals to which you belong, or on your own. In general, the majority of disability products provided by organizations, such as your workplace or an association, are less expensive and guaranteed at issue. You might choose to acquire coverage only by joining the group or working there. No specific underwriting is required. Some employers even cover the full cost of the disability premiums, up to 100%. If that’s the case, consider yourself fortunate because the number of employers offering disability insurance continues to decline. Finally, any disability payments you might receive are taxed if your employer or group pays some or all of your premiums.
If you have a mortgage or rent to pay, children to feed, bills to pay, or other financial commitments that can’t be put on hold, or you don’t have enough savings or investments to continue living the way you are for an extended length of time while you can’t work, then disability insurance is a need. Perhaps this product is not for you if you are one of the extremely few who can retire or pause work comfortably with their existing savings.
Generally speaking, the cost of disability insurance ranges from 1 to 3 percent of your yearly salary. The premium payments may be paid monthly, quarterly, or yearly.
The application process for individual disability insurance is fairly similar to that of life insurance. Insurability is determined at the underwriting phase of the application process. Insurers will look closely at whether or not you have any previous conditions that could make you unable to work in the future. Because your coverage amount is typically determined by your present income, there is an additional procedure to verify your income level and employment qualifications. The average earnings of prior years may also be used as a benchmark by some companies for determining premiums. You can contact one of our advisors today to help get you started with an individual disability policy.
You can do whatever you want! An individual disability insurance policy’s monthly benefit can be used to pay for essentials like food and housing, as well as larger expenses like student loans and medical care. In addition to cash compensation, many policies include additional services to assist policyholders regain their physical, mental, and financial health.
There are two types of disability insurance
- Short-term disability insurance is typically provided to pay for lost wages due to temporary or brief health problems brought on by less serious illnesses or accidents. Benefit payments may start as soon as you exhaust your sick leave, sometimes as early as 1–14 days after a claim is made, and coverage may run up to 52 weeks. Benefit payments normally last between 6–26 weeks. It is frequently employed for short-term health concerns such as minor accidents, sports injuries, and back troubles that could keep you from working for a few weeks or months.
Short-term plans typically cover 50 to 70 percent of your income and are generally provided by your employer. If your company does not provide short-term insurance, any qualified workers will need to apply for federal Employment Insurance (EI) disability benefits.
- You can protect yourself from the financial consequences of long-term health problems by purchasing long-term disability insurance. Typically, it kicks in as soon as the initial short-term disability period ends and can run anywhere from 2 to 5 years, though most policies extend coverage up to age 65 (standard retirement age). People buy it to supplement disability insurance their employers provide. It’s a go-to for a wide variety of situations, including mental health issues, injuries, and accidents.
There are several elements that influence the price if you choose to buy your own disability insurance policy rather than be covered by your company. You can identify and get insurance that matches your budget by being aware of them. The amount of income you want to replace in the event of a claim as well as your sex, age, occupation, and premium are some of the variables that affect your premium. For instance, you might anticipate paying more for coverage than someone who works in an office all day if you have a risky and dangerous line of work.
In the event that you become disabled and are unable to work, disability insurance policies are designed to partially replace your income. Insurers refuse to replace 100% of the income lost due to a disability in order to reduce the number of false disability claims. Only about 60% of the insured’s earned income is typically covered by group disability insurance policies. You will normally have to pay income tax on the benefits if you receive disability income from a group policy through your workplace.
To fill the gap between the group insurance and up to 90% of their income, an individual can independently apply for individual coverage through an insurance firm. If the premiums for the individual coverage are paid using after-tax money, the benefits received from the policy may be received income tax-free.
Typically, the response is no. You may typically anticipate receiving disability insurance benefits tax-free if you need to claim them. If your employer pays the insurance premium or if the premium is paid before taxes, the disability benefit may be taxed, decreasing the amount you get.
Find a disability solution for what you’re looking for
Disability insurance protects you from losing your income. In the event of a disability, you and your family will need financial security, and Protect Your Wealth can help you get it by guiding you through the process of buying the best disability insurance for your needs and budget.
Contact Protect Your Wealth or call us at 1-877-654-6119 to talk to an advisor today! We’re proudly based out of Hamilton, and service clients anywhere in Ontario, British Columbia, Alberta, and Manitoba including areas such as Waterloo, Vancouver, Airdrie, and Winkler.
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