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Why Is Disability Insurance Important If You Are Self-Employed?

Why Is Disability Insurance Important If You Are Self-Employed?


Disability Insurance Is Important If You Are Self-Employed

Disability Insurance provides income replacement if you are unable to work due to illness or accident. Statistics show that you are more likely to be off work for a period of time due to illness or injury than dying in a freak accident or from natural causes at a young age.

How Much Does The Insurance Cover?

Your level of coverage depends on two things: 
  • The type of insurance product your purchase
  • Your income  
There are all sorts of policies available through different insurance companies. You will usually have to provide some information regarding your current level of income as you generally cannot buy insurance for an amount that exceeds your current earning level. Most private policies include an option to purchase more coverage at regular intervals and you would provide updated information on your earnings at that time in order to qualify for the additional coverage.

What Are Your Options If You Are Self-Employed?

  • You can purchase your own private disability insurance policy. Private policies generally cover an individual, and in Canada, pay for benefits after a waiting period of between 30 and 90 days, or longer, depending on the particular policy. Depending on the size of your company and the number of people you employ, you may be able to obtain group disability coverage for your employees that would also include you.
  • You may also qualify for coverage through an association, such as the Canadian Dental Association or Ontario Medical Association if you’re a dentist or a doctor.

IMPORTANT TIPS – Before You Buy Disability Insurance:

  • Private Disability Insurance is usually costlier than group insurance, but generally the type of coverage it provides is more valuable in that it often provides benefits if you are unable to work in your regular occupation (sometimes referred to as “Own Occupation” insurance).
  • Many of these policies indicate that if you are able to work in another occupation, you may not continue to receive the whole benefit, but if your income is at a lower level due to this change you may be able to claim partial or residual benefits based on working reduced hours in your own occupation or in another occupation.
  • The process of applying to obtain the coverage is more complex than Group Insurance and it is important to be sure that you answer all of the qualifying questions accurately to avoid having your policy voided for alleged misrepresentation in the event that you need to make a claim.
  • The claim process can be quite daunting and special care and attention should be made to completing these forms, as completely and accurately as possible as well.
  • The coverage you consider necessary to maintain your lifestyle in the event of a disabling condition that prevents you from working is key. Other factors include an understanding of the claims process. Consider whether you will have to prove your earnings or income before becoming disabled. This could be important to discuss with your accountant so that you do not structure your finances in a way that makes it impossible for you to qualify for disability benefits. A qualified insurance agent should take all necessary factors into consideration when proposing coverage options, so ask them to do that.

If you are self-employed and you’ve filed a claim that has been denied, or if your claim gets denied in the future, contact Share Lawyers and put our experience to work for you.

We offer free consultations and there are no fees unless we win your case.  Find out if you have a disability case.

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This searchable database contains information about disability, critical illness and life insurance claims, and what you can do if you are denied or cut off of your benefits. It is a collection of the most common questions we receive from our clients. General answers have been provided by our lawyers.