When talking about providing Disability Insurance to your employees, it’s essential to ask yourself some key questions:
Could your family maintain their current lifestyle if you were unable to work and bring in an income? Could they pay their mortgage and utilities? Could they afford their car payment or be able to purchase enough groceries and clothing for the family?
These are tough questions, but the answers are important. If you answered “no” to any of the above, odds are your employees are in the same boat. Accidents happen when we least expect them, and in cases where injury or illness prevent you from working and bringing in an income others rely on, added protection is a must. Disability Insurance can help protect you and your family from that unexpected illness or accident that leaves you unable to work and earn an income.
What is Disability Insurance?
Disability Insurance provides coverage to replace a regular income in the event a person is unable to continue working, either for a period of time (Short-Term Disability) or indefinitely (Long-Term Disability), up to a maximum.
Learn more about trends and case studies in Disability Insurance on our recorded webinar with Sheila Karras, Director of Group Life & Disability at Empire Life.
What is the Difference Between Short- and Long-Term Disability Insurance?
There are two types of Disability Insurance:
Short-Term Disability (STD) Insurance
As the name implies, Short-Term Disability (STD) exists to replace a regular income for a short period of time, typically for a maximum of 13 – 26 weeks. During that time, an employee can be off work and still receive a portion of their income in weekly payments while they work towards recovery and an eventual return to work. STD is usually an employee-paid benefit, although employers can elect to cover some or all of the premium payments.
Long-Term Disability (LTD) Insurance
Long-Term Disability (LTD) is in place to protect employees from loss of income due to injury or illness for a long period of time. This period of time will differ depending on the policy, but it is possible to receive coverage up to age 65. Employees must satisfy the elimination period of 119 days, either through STD or Employment Insurance (EI), before becoming eligible for LTD. If at the end of the STD period an injury or illness persists and an employee is unable to return to work, LTD will take over, pending approval from the Insurer. Unlike STD payments, which are received weekly, LTD payments are received monthly.
Why is Disability Insurance Important?
Disability Insurance is important to both employers and employees
#1. Remain competitive and attract top talent. Prospective employees are looking at an employer’s benefit plan more and more. The more comprehensive the plan, the better – and Disability Insurance is near the top of the priority list.
#2. Protect the health and financial stability of employees. Accidents can happen to anyone, often when they’re least expected. Disability Insurance provides financial assistance to supplement income and keep families focused on recovery, not their finances.
#3. Offers added coverage. In Canada, we have government programs in place to assist individuals who are unable to work, namely Employment Insurance (EI) and the Canada Pension Plan (CPP). Disability Insurance provides coverage over and above these programs, and in the case of LTD, beyond their scope.
The best way to show how and why Disability Insurance is critical is to actually show you. We’ve created an infographic journey featuring John, an (admittedly hypothetical) man whose stroke and car crash caused him to be off work for a total of 29 months. Thanks to his Disability Insurance, he and his family were more prepared for the financial strain they were under as a result of John being unable to work and earn an income.