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TYPES OF
DISABILITY INSURANCE
Individual Plans
You can arrange your own disability insurance plan through a life and health
insurance agent. In fact, close to one million Canadians have their own policies.
There are advantages to owning an individual disability policy. While group coverage
ends when you change jobs or leave your association, an individual plan does not.
Because you pay the premiums, benefits are received tax free.
An individual plan can give you the most comprehensive and flexible coverage
available because it can be tailored to your needs. On the other hand, it is usually
more expensive than group coverage.
Generally, there are three types of individual disability insurance plans:
• Noncancellable The policy cannot be cancelled and the price cannot be
increased during the period of time set out in the contract. This is also called
"noncancellable guaranteed renewable".
• Guaranteed renewable The insurance company must renew the policy but it can
raise the premiums for everyone in a certain class or category. They cannot raise
individual premiums.
• Commercial On the anniversary of the contract, the insurance company can
refuse to renew the policy, or they can charge more because of any previous
claims you may have had.
TIP: The longer your waiting period before benefits begin after you become disabled,
the lower the premiums you pay. Discuss with your insurance agent the pros and cons
of waiting 180 days for your benefits instead of 30 or even 90 days. You could consider
using the money you save to buy other options such as a cost-of-living or inflation
protection increase, or to extend the length of time you are covered for benefits.
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