Yesterday in the office one of my colleagues suddenly broke out in a fit of coughing. It was stunning how quickly the people in the room cleared out – someone might as well have shouted “THERE’S A BOMB!”
As governments around the world work to mitigate the coronavirus pandemic, businesses and workers are becoming more and more concerned about their workplaces. The simple fact is that no one wants their co-workers to show up for work sick.
Fortunately, both businesses and individuals can be proactive by carefully reviewing their existing insurance coverage pertaining to sickness. While protection will depend upon the specific terms of each insurance policy, workers should have appropriate coverage so they can afford to take time to recover. There are three main types of protection that will pay a person so that they can stay home to recover.
GROUP DISABILITY INSURANCE
Typically purchased by companies as a perk to help attract and retain quality staff, most group disability policies offer 55% to 66% of a worker’s pre-disability income.
While this benefit may be fine for most workers in places like Saskatchewan, where the cost of living is quite low… in a cities like Vancouver or Toronto, most people would be in big trouble after only a couple of weeks of disability. As a consequence, people who rely on group benefits in areas where the cost of living is high will inevitably return to work too early and put their co-workers at risk.
What’s more is that more than half of the group benefit programs in Canada don’t even include disability. Medical and dental are good to have, but unfortunately they do nothing to replace a paycheque.
TRADITIONAL DISABILITY INSURANCE
Similar to group coverage, most traditional disability policies will pay about two-thirds of a workers pre-disability income. Most of these plans are intended to work in conjunction with Employment Insurance (EI) and don’t start paying until after the worker is disabled for 90 days.
Again, for employees this is partially adequate… but many self-employed people opt not to pay into EI, and thus would need to have 3 months of savings before they start earning through their policy.
SUPPLEMENTAL INSURANCE
A unique and relatively unknown type of coverage, Supplemental Insurance is designed to pay in addition to any other form of insurance. These policies will pay a benefit based on either a treatment (such as hospitalization or fracture) or based on loss of ability, and can often be expanded to include your whole family.
Supplemental insurance is a great way to bridge the gaps in other forms of living benefits to ensure minimumal loss, but as a standalone won’t cover all forms of disability. It works best when paired with other plans.
HOW TO MAKE SENSE OF IT ALL
As you can see, there is no magic bullet when it comes to income protection. Different workers in different occupations have various risks and disability insurance. Each plan has unique features and exclusions, and where some will pay others will refuse. Although everyone should have a clear understanding of their coverage, it can be pretty difficult to understand.
Ultimately the best bet is to sit down with a knowledgeable insurance rep who knows the ins and outs of living benefits. As usual just be sure that you’re talking to the right advisor, as many focus on death benefits or savings plans and might not be equipped to give proper perspective into disability.
Don't have a good rep?
No worries – just reach out to one of our Blue Sky advisors! We’re among the 4% insurance reps who specialize in living benefits in Canada, and we’re always happy to look at your current benefits to help you make sense of it all.
