In this interview, Toronto personal injury lawyer Allan Chapnik explains disability insurance.
What is disability insurance?
AC: At its simplest, disability insurance is an insurance company’s promise to pay you a certain amount of money each month when injury or illness prevents you from working and earning your pay. So, if you can’t do your job because you get sick or hurt, your disability insurer will give you money every month to replace the wages you’re not earning.
Does everyone have disability insurance?
AC: Unfortunately, no. Most people who do have disability insurance get it through their employment. Most large employers offer it to their employees, as do many medium sized employers. It’s less common with small employers. People who are self-employed sometimes buy this kind of insurance, too. Students (unless they’re also working), the unemployed and retirees would not have disability insurance.
How can I find out if I have disability insurance?
AC: Ask your employer. But it matters who you ask. A supervisor or manager may not know the answer. The best people to ask are the people in human resources (HR) or in a smaller organization, the bookkeeper or whoever does payroll. When in doubt, ask the boss. If you’re self employed and you’re unsure, ask your insurance broker.
“Unless you don’t need another paycheck ever again (lucky you), you should have a policy that will keep you afloat financially.”
Can I get disability insurance if my employer does not offer it?
AC: Yes, and you probably should. Unless you don’t need another paycheck ever again (lucky you), you should have a policy that will keep you afloat financially if you ever fall sick or are disabled by an injury. It can happen to anyone, at any time. If you do not have disability insurance, find an insurance broker right away. If you ever need disability insurance and you don’t have it, you will regret it.
What’s the difference between group disability insurance and private insurance?
AC: Group insurance is usually bought by an employer for its workers, who are then called members of the plan. If you’re self-employed, or you work for someone else and they do not offer group disability insurance, you can buy your own policy from an insurance company; that would be a private plan.
I have a group plan that pays for my visits to the dentist and pays for my prescription medicine. Does that mean I also have disability insurance?
AC: Not necessarily. Plans that pay for the dentist or for prescription medicine (called extended health coverage) are often bundled together with disability insurance in a single plan, but that isn’t always the case. Just because you have one doesn’t mean you have the other.
Through my work, I have extended health and disability insurance. My extended health plan covers my family members. Does that mean my family members are also covered by the disability insurance? If one of them falls ill and cannot work, can they get disability benefits to replace the income they’re not earning?
AC: While theoretically possible, the answer is going to be ‘No’. If your employer is willing to pay a high enough premium, it can buy any kind of insurance and have everyone covered. But employers just don’t do that. Group disability plans cover employees of the company who bought the insurance, not their family members. If in doubt, though, check the policy.
So what is the Policy?
AC: ‘Policy’ is another word for contract. But it’s a particular kind of contract: a contract for insurance.
If the contract is called a policy, what’s a Plan?
AC: Plan is often used interchangeably with Policy, but it can also refer to a group of Policies between the insurance company and the employer. Typically, there might be one policy for disability and another for extended health.
I have many more questions about disability insurance. What should I do?
AC: If you are thinking of buying disability insurance, look for a licensed insurance broker. If you are having a problem with your disability insurer (for example, your benefits have been denied) find a lawyer with extensive experience with disability insurance claims.
Allan Chapnik is a personal injury lawyer with Pace Law Firm in Toronto. Pace’s personal injury lawyers have been helping accident victims since 1980.