Why Most Canadians Are Underinsured for Disability Insurance
When Canadians think about protecting their financial future, life insurance often comes to mind. But one of the most overlooked—and arguably more critical—forms of coverage is disability insurance.
The Hidden Risk: Disability Before 65
According to industry data, nearly 1 in 3 Canadians will face a disability lasting longer than 90 days before age 65. Despite this, many are underinsured or completely unprotected. Why? Most people assume their group benefits from work will cover them if they become ill or injured. But the reality is far more complicated.
Why Workplace Coverage Often Falls Short
Most employer disability policies only replace around 60% of your income. Worse still, that income is often taxable, meaning your real take-home amount could drop to 40–50% of your regular earnings. That’s a huge gap—especially if you have a mortgage, childcare, or debt obligations.
Some group plans only offer short-term coverage, which lasts three to six months. If your disability goes beyond that, you could be left without income. Others may include long-term coverage but come with strict eligibility rules, long waiting periods, or limited benefit durations.
And remember: if you leave your job, you typically lose that coverage. Group plans aren’t portable—so if you switch employers, freelance, or retire early, you could suddenly be exposed.
The Financial Fallout of a Long-Term Disability
Bills don’t stop just because your income does. Mortgage payments, groceries, utilities, and tuition still need to be covered. Without proper insurance, many Canadians burn through their savings or derail long-term goals like retirement or funding their kids’ education.
Government programs like Employment Insurance (EI) offer some short-term support—but it’s limited. EI disability benefits last just 15 weeks and max out at $695/week (as of 2025). That’s hardly enough to sustain most households.
The Solution: Individual Disability Insurance
An individual disability insurance policy fills the gaps that group plans leave behind. These plans are tailored to your profession, income, and needs. Best of all, they typically pay non-taxable benefits, giving you more usable income during recovery.
You can also choose features like:
Own Occupation Coverage: Get paid if you can’t do your specific job—even if you can work in another role.
Cost of Living Adjustments (COLA): Protect your benefits from inflation over time.
Partial Disability Benefits: Continue receiving income if you can only return to work part-time.
Your Income Deserves Protection
No one expects to become disabled. But the risk is real—and far more common than most assume. Disability insurance is about more than just replacing a paycheck. It protects your lifestyle, your family, and your future goals.
For just a few dollars a day, an individual policy can provide peace of mind and financial security in the face of life’s unexpected challenges.
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John Iaconetti
Financial Advisor
The McClelland Financial Group of Assante Capital Management Ltd.
John Iaconetti is a Financial Advisor with Assante Capital Management Ltd. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Please visit www.tmfg.ca to discuss your circumstances prior to acting on the information above. Assante Capital Management Ltd. is a Member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization.
