Disability (Income Replacement) Insurance

Disability Insurance Services in Brantford, Ontario

The foundation of any sound financial plan is Income Replacement Insurance. Its purpose is simple: to replace an individual's income should they be unable to work as a result of either an accident or a sickness.

When income protection is not provided for our clients, they are at risk of losing everything they have. In many cases, a person's income may stop immediately when they become injured and unable to work . . . e.g.) persons who are self-employed. However, their expenses continue and, in fact, could be higher as a result of the disability. The chances of a client becoming disabled during their working years are far higher than of that same person dying.

While the need for Income Replacement Insurance is obvious, it is often overlooked at the time of a life insurance sale. Everyone thinks that they will remain in good health condition during working age. Everyone thinks that this is waste of money.

Chances of becoming disabled for 3 months or longer before age 65*

Percentage 58% 54% 50% 48% 40% 30% 23%
Age 25 30 35 40 45 50 55

* Derived from 1985 Commissioners Individual Disability Table A.

Why should you consider a personal disability insurance plan?

  • Worker's Compensation only covers work related accidents.
  • Unemployment insurance only covers 15 weeks.
  • Canada Pension Plan: Are you comfortable relying on the government for a benefit that can change?
  • Group and association coverage can fill a valuable role in long-term disability protection. However, the benefit may be limited by the definition of disability and coverage amount.

A custom designed individual disability insurance policy will provide you with guaranteed coverage and guaranteed premiums.

Some companies Return back your premium if there is no claim or claim of less amount than you have paid the premium. In that way you can save money and have peace of mind for Income Replacement.

Business Income Replacement Insurance

There are three main types of business disability insurance:

  1. Reimbursement of business expenses, called Business Overhead Insurance.
  2. Provision of a lump sum benefit to buy out a business owner's interest, called Disability Buy/Sell Insurance.
  3. Use of individual disability insurance on a "grouped basis" for key employees, called Wage Loss Replacement Plans.

1. Business Overhead Coverage

A business owner is responsible for a variety of fixed expenses. Some examples include rent, salaries of employees and utilities. If the business owner suffers a disability, these expenses continue, but the income-earning capacity of the business may be significantly reduced. Business Overhead Coverage provides the business with the necessary funds to pay these ongoing business expenses.

This coverage is available to self-employed professionals and business owners who:

  1. Are directly involved in the business; and
  2. Whose participation is essential to the continuing business operations

A business owner needs to have both (i) a personal disability plan to cover lost personal income and (ii) a Business Overhead Plan to cover the expenses incurred by the business.

The benefit provided by Business Overhead Coverage is limited to the business expenses incurred during a given month. Therefore, the monthly benefit that is paid by the policy can vary from month to month, and from client to client. The combination of benefit period and monthly dollar benefit define the total amount of dollars that can be paid per claim.

2. Disability Buy/Sell Policies

Often, there are several owners for a business. In this situation the owners may enter into buy/sell agreements which will govern how the business is dealt with in the event one or more of the owners dies, becomes disabled or suffers a bankruptcy.

Disability buy/sell insurance is designed to assist healthy owners to fund the purchase of a disabled owner's share of the business.