Disability
Insurance Facts
Quick
Facts About Disability Insurance
The
sole purpose of individual disability insurance is to replace your after-tax
income in the event of an accident or illness. These policies do not provide
protection from medical expenses or recovery of damages for "pain and
suffering".
Since
the benefit payments are designed to be income tax-free, insurance coverage
in the amount of 2/3 of your salary is roughly equivalent to your
net take-home pay. This is usually the maximum amount of insurance that
you can purchase.
Self
Employment and Disability Insurance
If
you are self-employed, you can only insure the amount of net income
that
you reported on your tax return, even though your actual earnings might
be higher. In this case, you might want to supplement your insurance
with
"business overhead coverage" that does not depend on net income.
Expect
the insurance policy to exclude or limit coverage for pre-existing conditions.
If you have a bad knee, for example, expect that your policy might have
a rider on claims due to knee injuries.
Most
policies are issued for a term of five years of coverage have
a 90 day waiting period before you can begin collecting a benefit.
Most
policies integrate with government benefits so
that the total amount of the benefit you collect will not exceed your net
after-tax income.
Cost of Disability Insurance
Expect
the premium cost to be about 2% of your salary if you have a "desk job" and
about 4% of your salary if you work with your hands. Of course, this
is a very rough guideline, and the actual cost will depend on a greater
number
of individual factors.
Find
out how much it will cost to get
a Disability
Insurance Quote.
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Ivon T. Hughes, The Hughes Trustco Group Ltd.
Online Insurance Broker - Get a FREE Quote TODAY!
Tel: (514) 842-9001 Email: [email protected] Web: http://www.trustco.ca
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