If you can’t work following an accident or illness, your disability insurance may compensate you for lost salary. Here are eight questions about disability insurance you should ask yourself.
1. What does “disability” mean?
Being disabled means being unable to work or to do your regular activities due to an illness or injury.
However, the definition of disability depends on the insurance contract. For example, here are two definitions with very different consequences for persons living with an illness or injury:
- Inability to execute all the tasks of your regular job.
- Inability to execute the tasks of a position for which you are—or could reasonably become—qualified given your training, education or experience.
To better understand your insurance coverage, contact your insurer.
2. What is a waiting period?
Your disability insurance contract probably provides for a waiting periodThe waiting period is the period during which an insured is not eligible for insurance benefits, even though the covered risk may have occurred. For example, in disability insurance, an insured may be disabled but not receive money from their insurer during the first two weeks of a disability.. This means that you must wait a specific number of days after you become disabled before you can receive benefits.
The waiting period may vary depending on the contract. To find out the duration and conditions of the waiting period that applies to you, contact your insurer.
If your employer offers sick days, you can usually use them during the waiting period.
3. Short-term or long-term insurance?
We often hear about short-term and long-term insurance, but what are they exactly?
Short-term disability insurance:
- Goes into effect before long-term disability insurance.
- Pays a percentage of your regular income, usually less than 70%.
- Is valid for a specific period that is calculated in number of weeks.
- If you do not have short-term disability insurance, you could be entitled to public coverage, such as employment insurance disability benefits.
Long-term disability insurance:
- Goes into effect when your short-term disability or employment insurance benefits run out.
- Pays long-term benefits that are calculated, for example, based on a percentage of your regular income. The calculation is determined based on your insurance contract.
- Benefits are paid for a maximum period that is stipulated in your contract. This period may run for a long time; for example, until age 65.
- Some contracts provide for a waiver of premiums. Basically, this means that you don’t have to pay for disability insurance as long as you’re disabled.
4. Individual or group insurance?
- Available to all members of a group, such as all employees of a company or all members of a professional association.
- In many cases, you don’t have a choice regarding coverage or whether or not to sign up.
- Available on an individual basis, for example, to self-employed workers.
- You get to choose the coverage you would like.
5. Taxable or non-taxable benefits?
You may have to pay tax on the money you receive from your insurer.
- If your employer, union or professional association assumes a portion of the insurance cost, you normally will have to pay tax on the money you receive while disabled.
- If, on the contrary, you assume the full cost of the insurance, the benefits received during your disability period are generally not taxable.
If you’re not sure, contact your employer or insurer for more information.
Martin works at a wood furniture manufacturer as a cabinetmaker. While on vacation, he had a serious ski accident and hurt his back. He has since been unable to return to work and now receives disability benefits from his insurer.
To occupy some of his time, he spends a few hours a week helping a friend with his small business. This earns him some money, but nowhere near as much as he earned as a cabinetmaker.
His insurer will probably reduce the benefits (the money it pays Martin). Generally, benefits are adjusted based on the insured person’s total income.
If you receive disability benefits, contact your insurer to find out about the consequences of earning additional income.End of the insight
6. Who decides if you are entitled to insurance money?
Contrary to what you may think, your physician doesn’t decide whether your disability is covered or not by your insurance.
It’s your insurer that makes the decision based on your condition and your contract.
7. What can you do if you’re dissatisfied?
If your insurer refuses to pay the amounts you believe you’re entitled to, you should first try to settle the situation directly with your insurer.
Then, if you think your insurer is wrong and refuses to correct the situation, you can file a complaint with the AMF by contacting the Information Centre.
8. Are you eligible for public disability plans?
Regardless of whether you have disability insurance or not, you may be eligible for benefits provided by public plans.
Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST)
If your disability is due to a workplace accident, you could receive a benefit from the Commission des normes, de l’équité, de la santé et de la sécurité du travail. (CNESST)This link will open in a new window.
Société de l’assurance automobile du Québec (SAAQ)
All Quebeckers are automatically covered for injury or death resulting from a traffic accident, regardless of who is responsible for the accident. For more information, consult the Société de l’assurance automobile du Québec's websiteThis link will open in a new window.
If you suffer from a serious and permanent health issue that prevents you from performing any kind of work, you may be eligible to receive a disability pension from Retraite Québec. However, you must have already made contributions to the Québec Pension Plan (QPP). For an overview of the value of your disability pension, check your statement of participation. For more information, refer to Retraite QuébecThis link will open in a new window's websiteThis link will open in a new window.
Your insurer may co-ordinate benefits with these plans, i.e., it may limit the amounts paid based on the benefits you’re already receiving from another plan.