{"id":306,"date":"2022-04-01T11:00:16","date_gmt":"2022-04-01T15:00:16","guid":{"rendered":"https:\/\/blog.term-life-insurance.ca\/?p=306"},"modified":"2022-04-01T11:55:12","modified_gmt":"2022-04-01T15:55:12","slug":"does-term-life-insurance-cover-disability","status":"publish","type":"post","link":"https:\/\/term-life-insurance.ca\/blog\/does-term-life-insurance-cover-disability\/","title":{"rendered":"Does Term Life Insurance Cover Disability?"},"content":{"rendered":"

Term life insurance is one of the most popular options for life insurance coverage due to its uncomplicated application process and its straightforward and affordable policies. Despite its comprehensive nature and flexibility, it does not automatically offer <\/span>disability coverage<\/span>. However, it is possible to add <\/span>disability riders<\/span> to the term life insurance policy purchased if desired.<\/span><\/p>\n

If you are reading this, you may want to enhance the term life insurance coverage you have to provide income protection for your loved ones if an injury or illness prevents you from generating income to meet your financial responsibilities.<\/span><\/p>\n

With this in mind, it can be an excellent idea to add a disability income rider to your life insurance policy to provide better coverage for your beneficiaries. Therefore, they can receive a monthly benefit if you suffer an injury or illness, which acts as an income replacement.<\/span><\/p>\n

What Is Term Life Insurance?<\/b><\/h2>\n

Term life insurance is a contract between you and the insurance company, with the objective that your beneficiary\/beneficiaries will receive a monetary benefit in the event of your death. In order for the selected person(s) to receive the death benefit, you will have to make premium payments during the term of the life insurance policy.\u00a0<\/span><\/p>\n

Regarding the protection offered by term life insurance, it does not provide financial assistance to an insured who experiences a disability. Rather, as the name implies, term life insurance pays out in the event of the insured’s death. As we\u2019ve previously mentioned, you can add extra protection to your life insurance policy through an optional add-on known as a \u201crider\u201d For example, if you add a disability income rider, your life insurance policy will pay you income if you suffer an illness or injury that results in a disability on top of your standard coverage.<\/span><\/p>\n

What Is Disability Insurance?<\/b><\/h2>\n

Disability insurance protects your most valuable asset \u2014 your ability to earn income to provide for you and your family. How does it work? Quite simply, disability coverage pays the policyholder when diagnosed with a disability and cannot work due to health. Disability benefits are provided through monthly payments during the period of disability, although this will depend on the characteristics of the disability insurance taken out.<\/span><\/p>\n

Most life insurance policies have optional add-on disability riders added to help policyholders protect their income in the event of disability. A disability rider often offers less protection and customization than disability insurance itself.<\/span><\/p>\n

Finally, life and disability insurance offer different coverage, and it will depend on your circumstances to choose the policy that best suits your protection needs.<\/span><\/p>\n

Getting Disability Coverage Through Life Insurance<\/b><\/h2>\n
\"Getting
Getting Disability Coverage Through Life Insurance<\/figcaption><\/figure>\n

Disability insurance is one of the most reliable options to replace lost income in case an injury or illness prevents you from working or earning income. However, if you cannot afford to purchase another policy, consider adding disability riders to your existing life insurance for a reduced cost.\u00a0<\/span><\/p>\n

There are different life insurance riders that may be useful if you suffer an injury or illness that leaves you disabled. The following are the ones that can bring the most benefits to your coverage.<\/span><\/p>\n

    \n
  1. \n

    Disability Income Rider<\/b><\/h3>\n

    In the event of an illness, the rider pays a monthly payment. The policyholder must select the duration of the payment and the monthly payment (typically capped). Typically, this rider has a retroactive payment of 30-90 days. Payments begin at the end of this waiting period.<\/span><\/b><\/li>\n

  2. \n

    Total Disability Waiver For Premium Rider<\/b><\/b><\/h3>\n

    This Rider provides protection in the event that you have permanently lost your job or have been diagnosed with a long-term chronic illness. After that, the insurance company will waive payment of the policy premiums for as long as the insured remains totally disabled. In general, disability waiver riders payout after an individual has been totally disabled for 4-6 weeks. The rider will remain valid until a specified age for the insurance claimant, usually up to 60 – 63, after which it expires.<\/span><\/li>\n

  3. \n

    Mortgage Disability or Credit Disability Insurance Riders<\/b><\/h3>\n

    A Mortgage Disability Rider covers the entire loan or mortgage payment in the event the insured is permanently disabled. Payment is made for a defined duration such as two years from disability, five years after disability, or up to 65. During the application process, you will be required to provide proof of outstanding debts.
    \n<\/span><\/b><\/li>\n

  4. \n

    Accelerated Death Benefit Rider<\/b><\/h3>\n

    When you purchase an accelerated death benefit rider for your life insurance policy, you (as the insured) can receive a portion of the death benefit if you become terminally ill. <\/span><\/b>In addition, this will allow your family members to balance the financial needs related to treatment and other care that may be necessary.
    \nIn most cases, the amount you can receive is based on a percentage of the policy’s death benefit amount.\u00a0<\/span><\/b><\/li>\n<\/ol>\n

    Why Do I Need Disability Coverage?<\/b><\/h2>\n

    Life can be unexpected. Similar to savings and investments, insurance is the third cornerstone of holistic financial planning. According to a government statistic from 2017, the prevalence of disability among <\/span>Canadians increased with age<\/span><\/a>, from 13% for those aged 15 to 24 years to 47% for those aged 75 years and over. With that in mind, insurance is a reliable way to save for the future without having to rely heavily on your savings should the need arise.<\/span><\/p>\n

    Consider this statistic: i<\/span>n 2017, one in five<\/span><\/a> (22%) of the Canadian population aged 15 and older – or about 6.2 million individuals – had one or more disabilities.<\/span><\/p>\n

    Most long-term disabilities are caused by ill-health. This could limit your ability to generate income, which can severely devastate your and family\u2019s finances.\u00a0<\/span><\/p>\n

    While publicly funded disability programs do provide somewhat of a security net, these programs often provide a meager sum. As of 2022, Ontario Disability Support Program provides 1,169\/month, while BC\u2019s Persons With Disability program provides $1,358.50\/month, with other provinces around the same. Disability insurance supplements this amount in order to maintain quality of life both in the short-term and long-term.<\/span><\/p>\n

    If you think about it, the vast majority of Canadians should have better protection in the event of a disability.<\/span><\/p>\n

    Alternatives To Life Insurance With Disability Coverage<\/b><\/h2>\n

    If you are looking for other life insurance alternatives with a disability policy that may better suit your needs, here are a few different options:<\/span><\/p>\n

    Short Term Disability Insurance (STD)<\/b><\/h3>\n

    Short-term disability can help in the event of a temporary absence of the insured’s ability to work. Generally replaces between 60% and 85% of your regular income. Most short-term policies offer income protection for several months, though it is also possible to find policies that offer income protection for up to two years.<\/span><\/p>\n

    Most common conditions covered by Short Term Disability Insurance include:<\/span><\/p>\n