Did you know that 1 out of every 3 Canadians will become disabled for a period of time that exceeds 90 days before they reach the age of 65? Did you know that if this disability exceeds 90 days, the average length of the disability is just under three years? If you are like most people and you cannot financially afford to be disabled for a few weeks or longer, you may want to enroll in a Long Term Disability (LTD) plan.
These insurance plans are designed to replace up to 85 percent of your pre-disability, after-tax income. Although how much disability coverage you need varies, the amount of your benefit is usually determined by a specific formula. In the event that you do become disabled, the benefits under your LTD plan will usually kick in after you have been disabled for a period of 90 to 120 days.
Keep in mind that if you personally pay LTD premiums, you will receive these benefits tax-free. However, if your employer pays the premium, the benefits you receive will be taxable. You should also remember that:
- You may only be able to receive a certain amount, which is referred to as the Non-Evidence Maximum, without providing medical evidence after becoming disabled.
- Receiving other forms of compensation after an accident can reduce your benefits
- Some group plans have a waiting period of three to six months
If disability insurance is not currently a part of your coverage, reach out to us at BlueRock Wealth Management Inc. We are here to help you further understand how this form of insurance works and how it could benefit your personal situation.