Get the best disability insurance in Canada for 2024
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Imagine this: 1 in 3 Canadians typically face a serious injury or illness that stops them from working for at least three months during their prime earning years. What if you're one of them? Could you still manage your bills without your regular income?
This is where disability insurance comes in. Disability insurance in Canada is crucial as it replaces up to 85% of your income, ensuring financial stability during unforeseen illnesses or accidents that prevent you from working.
This guide explains how Canadian disability insurance works, short-term vs long-term, the coverage, why you must consider purchasing a disability policy, and the best disability insurance plans. Use our free tool to compare plans and get free quotes.
Disability insurance Canada: 5 key takeaways
- Canada disability insurance offers up to 85% income coverage.
- Short-term or long-term options are available.
- Long term disability insurance supports until recovery or retirement.
- Plans can be customized to match your income and needs.
- Premiums are typically 1-3% of annual income.
What is disability insurance in Canada?
In Canada, disability insurance is a type of insurance that protects your income if an illness or injury keeps you from working. In essence, it ensures your earning potential.
Both short-term disability (STD) and long-term disability (LTD) insurance are available. Additionally, disability insurance exists both as a government benefit and as a separate private policy.
Employers frequently offer short-term disability insurance as an employee benefit. It is limited to just a few months of coverage. Long-term disability insurance is available to purchase individually. It protects your earning potential until retirement age.
For both short-term and long-term insurance, there is some public assistance in Canada. These are the Employment Insurance (EI) and the Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) respectively. These important programs help many people, but they are not always enough.
For example, the public CPP/QPP assistance pays an average of $619.75 per month. That is not enough to live on.
You can protect yourself and your dependents by supplementing public programs with additional LTD insurance. Should you need disability coverage in the future, a good plan is a valuable lifeline. The most generous plans can cover you for up to 85% of your previous pre-tax monthly income.
Interested in a disability insurance quote? You can compare the best insurers and plans at the top of this page.
What is group disability insurance in Canada?
Group disability insurance is a plan that provides coverage to a group of individuals such as company employees or a set group of members part of associations and organizations. If one of the named individuals on the group disability insurance policy can no longer work due to an injury or illness, the policy will provide that individual with a replacement income.
How does disability insurance work?
Disability insurance works like other types of insurance. Risk is spread over a large number of policyholders. Everyone pays a small amount to be protected.
The main benefits of disability insurance are peace of mind and the financial safety net it offers. A serious injury or critical illness can end a career, but with disability insurance, you can be assured that your financial future is secure no matter what arrives.
Here is a breakdown of how short-term and long-term disability insurance work together.
When a worker first stops working, short-term disability insurance will take over. This is just a lifeline to temporarily hold the worker over financially until they can return to work. It lasts up to 6 months.
Many employers offer an employee disability benefit. You can also purchase short-term coverage individually if you are a self-employed person or someone who does not otherwise have short-term disability coverage available through an employer.
After short-term disability ends, someone who is still unable to work may be eligible for long-term disability insurance. It usually only begins after a 3 to 6-month waiting period. It potentially covers years of payments until the worker can return to work.
In some cases, long-term disability insurance can even provide a worker with a disability a monthly income until retirement!
Good to know
Not all long-term disability policies are equal or offer the same coverage. Always check the fine print before buying any policy.
Before we jump into further details of disability coverage in Canada, here's a quick look at the top policies. You can explore them in detail using our free comparator and also get free quotes by clicking the buttons in the next section.
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What are the best disability insurance plans in Canada?
Which disability insurance provider and policy is best for you depends on your needs, age, health, and ability to pay.
Here are some commonly searched life insurance providers in Canada:
- Blue Cross Disability Insurance
- BMO Disability Insurance*
- Canada Life Disability Insurance
- CIBC Disability Insurance*
- Desjardins Disability Insurance
- iA Excellence Disability Insurance
- Manulife Disability Insurance
- OMA Disability Insurance (for OMA members only)
Good to know
*BMO, CIBC, and TD do not offer disability insurance, but rather mortgage disability insurance and disability protection of lines of credit. But is mortgage disability insurance worth it? It can offer peace of mind by ensuring your mortgage payments are covered if you're unable to work due to illness or injury. It's worth considering based on your financial stability, existing coverage, and risk tolerance. Assess the cost versus the potential benefit to decide if it aligns with your financial protection strategy.
| Insurance Plan | Key Features | Key Coverage | Get a quote |
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| iA Superior Program (iA disability insurance) |
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| Canada Life Independence Plan |
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| Beneva |
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| Humania Income Insurance - Accident and Sickness |
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| RBC Professional Series® |
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| Manulife Personal Accident Disability Insurance (long term disability insurance manulife) |
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| RBC Quantum® |
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| Humania Assurance - Accident | A broad range of occupational classes |
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| RBC Bridge Series® |
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| RBC The Foundation Series™ Policy |
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| iA Acci-Jet Program |
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How does disability insurance work in my province?
Public disability benefits are not uniform from one province to another. Amounts, eligibility, and available programs change. Possible benefits include income assistance, access to healthcare providers, and housing assistance.
HelloSafe has put together individual guides for:
- Disability insurance Alberta
- Disability insurance BC
- Disability insurance Ontario
- Disability insurance Quebec
If you believe that you may be eligible for disability benefits from your province or territory you should inquire with the relevant provincial authorities. Below we’ve compiled a list of resources by province. The links open up on the corresponding provincial website:
- Alberta Disability Benefits
- British Columbia Disability Benefits
- Manitoba Disability Benefits
- New Brunswick Disability Benefits
- Newfoundland and Labrador Disability Benefits
- Northwest Territories Disability Benefits
- Nova Scotia Disability Benefits
- Nunavut Disability Benefits
- Ontario Disability Benefits
- Prince Edward Island
- Quebec Disability Benefits
- Saskatchewan Disability Benefits
- Yukon Disability Benefits
How are life and disability insurance different?
Life insurance and disability insurance are essentially designed to give you and your loved ones financial protection but there are crucial differences.
Life insurance provides financial protection to your beneficiaries in the event of your death, paying out a lump sum to them. Disability insurance, on the other hand, as mentioned before, offers income replacement to you if you're unable to work due to a disability or illness, ensuring you have financial support during such times.
Essentially, life insurance benefits your dependents after your death, while a disability plan benefits you directly during your lifetime if you cannot earn an income.
What does short-term disability insurance cover?
The Canadian government offers Employment Insurance (EI) disability benefits to workers suffering from medical issues that prevent them from working. It lasts up to 15 weeks and pays 55% of previous earnings, up to a maximum of $638 per week.
Employment taxes fund this program. Eligible recipients include the recently unemployed, those taking parental leave, and those unable to work due to medical reasons.
Workers seeking EI due to disability are required to obtain a medical certificate to explain their illness, injury, or condition. Private plans, offered through an employer, are designed specifically for workers missing time due to illness or injury.
Check with your employer to learn if you are covered by Canada’s Employment Insurance (EI) benefits or a private STD insurance plan.
What does long-term disability insurance cover?
Long-term disability insurance, also known as LTD, covers between 40 and 85% of your previous monthly pre-tax income. High earners should note that payments may have a cap of $5,000 per month. As always, coverage amounts depend on the insurance plan.
In the event of a catastrophic need, disability coverage makes sure that you and your family will be okay. You will still be able to cover major bills, medical care, and day-to-day living expenses.
Wondering if LTD is worth it? The public CPP disability benefits plan offers an average of $619.75 per month and a maximum monthly benefit of $1,457.45. Would that be enough to cover your expenses? Maybe not.
How much CPP pays:
| Type of benefit | Average monthly amount | Maximum monthly payment amount (2024) |
|---|---|---|
| CPP disability benefit | $1,064.80 | $1,457.45 |
| CPP post-retirement disability benefit | $524.64 | $524.64 |
| CPP children’s benefit | $264.53 | $264.53 |
Note: CPP disability benefits are updated every January and may go up to match an increase in the cost of living.
What conditions qualify for disability in Canada?
Insurance companies all have different definitions of disability. Qualifying conditions may change from insurer to insurer, plan to plan, and case to case. These conditions are defined as conditions that would prevent a worker from being able to perform their job.
Among others, qualifying conditions include:
- Amyotrophic Lateral Sclerosis (ALS)
- An accident occurring on the job
- Cancers
- Cardiovascular disease and stroke
- Chronic fatigue syndrome
- Early-onset Alzheimer's Disease
- Idiopathic Pulmonary Fibrosis (IPF)
- Injuries affecting the body, including the back and the brain
- Huntington's Chorea Disease
- Gastrointestinal issues such as Crohn’s disease, irritable bowel syndrome and colitis
- Loss of hearing
- Loss of vision
- Mental health issues, such as anxiety, depression and bipolar disease
- Multiple sclerosis
- Parkinson's Disease
- Post-traumatic stress disorder
- Post-inflammatory Pulmonary Fibrosis/Interstitial (Non-idiopathic) Pulmonary Fibrosis
- Progressive Polyneuropathy
- Seizures
Many of the above conditions also qualify for critical illness insurance policies, which provide a one-time payout instead of an ongoing income replacement. Learn more about how the two types of coverage compare from our critical illness vs disability insurance guide.
How much does disability insurance cost?
Disability insurance typically costs between 1-3% of your monthly salary, though it can range as high as 9%.
Your premiums depend on coverage amount and length. The waiting period for the insurance to kick in after an illness or injury, your age, current health, and occupation are also taken into account.
There are two types of LTD insurance policies available. You may purchase either any occupation or regular or own occupation disability coverage. The former is less expensive, but you can lose benefits if you can do a different job. The latter is more expensive, but it protects your earning potential if you can no longer do the job you do today.
For example, let’s imagine Tyrone, a 35-year-old construction worker living in Mississauga. One day at work, he injures his back after falling off of a ladder. His injury means that he is no longer able to lift heavy loads or climb up scaffolding. This affects his ability to continue working in construction.
If Tyrone only has an occupation policy and he can work in a different capacity, such as an office job, the insurance company may deny a payout. On the other hand, a regular or own occupation policy would pay out because he’s no longer able to work in his regular profession of construction.
Any occupation disability policies make particular sense for high-earners with a very specialized skill set. As everyone has different needs, check with insurers and compare disability insurance quotes at the top of this page.
How much disability insurance do I need?
There is no hard rule on how to calculate how much disability coverage you need. It depends on your family situation and your risk profile. You will need to consider your monthly spending and anticipated needs. Note that many plans have a waiting period before they kick in.
Here are some good questions to ask yourself when considering STD or LTD coverage:
- Do you have existing short-term disability benefits through an employer?
- Do you have dependents? You may have children, a spouse, parents, or siblings you support financially.
- Are you a single parent or the sole breadwinner in your family?
- How much do you still owe on your mortgage?
- Do you have a car loan, credit card, or other debts to service?
- How long could you and your family stay in your house without your salary?
- How much money do you have saved?
!If you have any occupation disability coverage, you may lose benefits if you are well enough to do a different job. For example, mobility issues may mean you can no longer work a physical factory job but may be apt to perform an office or service job from a seated position.
How to get disability insurance?
How do I get STD insurance?
Short-term disability insurance is often offered through one’s employer. Self-employed people can speak with an insurance broker about a plan or purchase a plan online.
In Canada's public system, the government offers Employment Insurance (EI) benefits to workers with medical issues that prevent them from working. Workers must obtain a medical certificate explaining their qualifying illness, injury, or condition. It lasts up to 15 weeks while paying 55% of previous earnings (up to a maximum of $638 per week).
How can I get LTD insurance?
Long-term disability insurance can be purchased online, directly through an insurer or insurance broker. It ensures your ability to cover major bills and day-to-day living expenses even if you cannot work.
LTD coverage is affordable protection. Here is what a leading provider quotes for different profiles:
| Age of insuree | Monthly salary insured | Monthly premium |
|---|---|---|
| 30 | $2,500 | $37 |
| 30 | $5,000 | $70 |
| 50 | $2,500 | $69 |
| 50 | $5,000 | $132 |
We recommend that you get quotes tailor-made for you to get the exact premium and coverage details. You can do it right here. Use our free comparator below and explore the best disability plans from Canada's top providers right here.
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Is there disability insurance for self employed people in Canada?
Yes. Self employed disability insurance is available for Canadians. Disability insurance is crucial for freelancers and entrepreneurs. If you are unable to work, you are unable to earn. You may also have recurring business expenses that you need to keep paying even while you are away.
For short-term disability needs, self-employed people have the same right to apply for EI benefits as any other worker. Those who need the additional protection of a short-term plan can purchase a plan online or speak with an insurance broker.
For long-term disability insurance, the self-employed can purchase plans just like the employed.
Is disability insurance tax deductible?
Unfortunately, disability insurance premiums are not typically tax-deductible in Canada.
We recommend speaking with a tax professional if you feel that you may qualify for a tax deduction. Taxes are a complex topic. The specifics can change dramatically between individuals.
While disability insurance premiums are not tax-deductible, the disability tax credit reduces the income tax of people with a disability.
Good to know
Note that should you ever need them, the payments provided by disability policies are tax-free.
Is disability insurance taxable?
Disability insurance benefits may or may not be taxable. It depends on who paid for the disability insurance policy.
As a general rule, if the premiums are paid for after-tax the benefits are not taxable. This is a nice perk because it can give you an income similar to what you made before receiving disability insurance benefits.
On the other hand, if premiums were paid before taxes, the benefits themselves are taxable. Here is a chart to help make it easier to understand:
| Type of disability insurance | Is it taxable? |
|---|---|
| Individual long-term disability insurance | |
| Self-employed long-term disability insurance | |
| Employer disability insurance (if the employer pays 100% of premiums) |
|
| Employer disability insurance (if the employer deducts the premiums from your paycheque) | |
| Canada Pension Plan disability benefits | |
| Employment Insurance sickness benefits |
What is the Disability Tax Credit?
The Disability Tax Credit allows people with physical or mental impairments to reduce their income tax. Applying for the tax credit is important as it is a prerequisite for accessing multiple federal, provincial, and territorial disability benefits.
Eligible people need to be deemed to have a severe and prolonged impairment by a medical practitioner. Apply for the Disability Tax Credit through Canada.ca
Who is a disability lawyer and do I need one?
A quick search on disability insurance on the internet might give you results such as "lyme disease disability insurance claim denial", "arthritis disability insurance claim denial," and more. This is because disability insurance claim denials are more common than you might think, often including conditions such as:
- Arthritis
- Lyme disease
- Benign brain tumour
- Stroke
- Cancer
- Brain injury
- Whiplash
In Canada, it's a concerning fact that about 60% of long-term disability insurance claims face rejection, and this includes denials of valid claims as well.
A common cause for these rejections is the private company's assessment that the disability is not severe enough to meet the criteria for benefits. Insurers may also count on the possibility that claimants, overwhelmed or discouraged, might not pursue an appeal.
This is where the role of disability insurance lawyers becomes crucial. These legal experts specialize in managing and contesting claims. They navigate the complexities of the claims process and work to overturn unjust claim denials.
Good to know
For a comprehensive understanding of disability lawyers, including their working methodology, selection criteria, and fee structures, consider exploring our detailed guide on long term disability lawyers.
What is key person disability insurance?
Key person disability insurance or key man disability insurance ensures that a company can survive when a key employee is unable to work. When this happens, the insurance provider will pay the monthly key person disability benefit to the company so that they can cover any financial expenses that come with the loss of an important employee. Read our full guide on key person disability insurance.
See our articles on disability insurance:
- Is life and disability insurance worth it? Review 2024
- Sun Life disability insurance review 2024, claims, contact
- Canada Life disability insurance 2024 review, free quotes
- Manulife disability insurance 2024: Review and contact
- Group disability insurance in Canada: Full 2024 guide
- Mortgage Disability Insurance in Canada: 2024 guide
- Key Person Disability Insurance in Canada: 2024 guide
- Desjardins disability insurance 2024 review and contact
- Long term disability lawyer in Canada: 2024 guide
- iA Disability Insurance 2024 review, contact, free quotes
- Blue Cross Disability Insurance 2024: Review & contact
- Best Calgary disability insurance in 2024: Free quotes
- Best disability insurance Manitoba in 2024: Free quotes
- Physician disability insurance 2024: Top plans, cost, quotes
- RBC Disability Insurance review 2024, contact + quotes
- What is disability buyout insurance? 2024 guide
- Disability insurance for dentists: 2024 guide + best plans
- How much disability insurance do I need? 2024 guide
- SSQ Disability Insurance: Coverage, contact & review 2024
- Is BMO Disability Insurance Right for You? Review 2024
- Is Cumis disability insurance good in 2024?
- Cooperators Disability Insurance Review 2024
- AMA Disability Insurance Review 2024
- Is Scotiabank Disability Insurance the best? Review 2024
- Is CIBC Disability Insurance the best? Review 2024
- Is Td disability insurance worth it in 2024?
- Is State Farm disability insurance the best in 2024?
- Is disability insurance tax deductible? 2024 guide
- Best Self Employed Disability Insurance in 2024
- Get Quebec disability insurance: Updated 2024 guide
- Get the best disability insurance BC in 2024: Free quotes
- Get the best disability insurance Alberta plans in 2024
- Critical Illness Insurance vs Disability Insurance in 2024
- Employment Insurance Canada: EI benefits in 2024
- Get the best disability insurance Ontario plan in 2024
- Short term disability 2024: How to apply | What qualifies
- Best long term disability insurance in 2024 + free quotes
- Get a quote disability insurance
