MONEY: Calculating the value of disability insurance

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Do you have enough insurance?

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I am surprised at how many working Canadians still have so little insurance to protect their families or their way of life in the event of the unexpected. Even as we come out of the pandemic, I still see a lot of people who just think it’s too expensive to get insurance.

Let me ask you a question: what do you think is your greatest asset? It’s not your home, your car, or your coin collection. It’s you. Your greatest asset is your future earning potential and ability to earn employment or self-employment income.

Here’s another question to ask yourself: what are the chances of something happening in the future that will have a substantial impact on your current lifestyle? Well, of course, unless you look into a crystal ball, no one can answer that one. Most people think they have adequate insurance coverage for their home or vehicle, but many overlook the risks associated with personal disability.

Ask any insurance agent, they’ll tell you. You are much more likely to become disabled than to die from an accident. Sure, many Canadians buy disability insurance through their employer as part of a group coverage program, but many never check to see if it’s really enough.

Over the past 35 years, advances in medicine have allowed us to live longer, improving your chances of surviving serious illness. Deaths from heart attack and stroke are down 50% from the 1980s and today more than 70% of people will still be alive five years after suffering their first heart attack.

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Survival rates for many types of cancer have also increased dramatically. Overall mortality rates have declined; however, our morbidity rates have increased. Every day, the number of people living with a serious illness increases and, according to Statistics Canada, 33.2% of Canadian seniors retire with a disability.

It is important to also mention that Canadian women have the highest prevalence of disability in all age group studies (2019).

So what should you do? Start by identifying your potential risks. Everyone will have a different situation. While you may receive some benefits from your employer or even a CPP/QPP disability benefit, ask yourself if this will be enough, especially in the long run? The fact is, most people are highly dependent on their ability to earn an income, and many live paycheck to paycheck. If you were faced with a disability, do you have the insurance in place to protect your family and your lifestyle? No one wants to suffer serious irrecoverable financial hardship.

Risk management anticipates, prepares and implements a solution to any potential risk to your financial security. Of course, you won’t be able to tone down everything life throws at you; but you can mitigate the damage with good insurance, constant planning, saving for your future, and a good emergency fund to fall back on if needed.

Good luck and best wishes

Christine Ibbotson

Christine Ibbotson is a national radio host and author of three books on finance, as well as the Canadian bestseller, How to Retire Debt Free & Wealthy. For more information, visit or send a question to [email protected]

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