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Disability Insurance – Why Is It Important? and how much does it cost In canada?

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Disability insurance guarantees you money if you are not fit for work. So true, when we are young and energetic, it is not really pleasant to think about such situations, but it happens, and a lot, so, before you flip through the subject, it is important to know it, and understand that it is actually a type of long-term investment – investment in yourself. Something will happen to you, guaranteeing your livelihood. Absolutely not a matter worth underestimating.

Work incapacity insurance – important!
As a rule – disability insurance is insurance coverage that guarantees payment of monthly compensation and release from the payment of current insurance premiums, controls of certain events. This is in fact the possibility for the insured to receive a monthly payment instead of a salary in cases of illness or accident. Disability insurance basically secures the insured’s source of income while he is unable to work. This payment is supposed to ensure a livelihood for the family members and is supposed to be such as to maintain the standard of living of the family when it comes to partial or complete loss of work capacity. It is important to emphasize – there was a big mess in these insurances, but the Supervisor of Insurance – Dorit Salinger, made an order there, and from August 2017 uniform policies will be marketed (see extension below) – this will allow you to hone their insurance components and compare different offers.

One way or another, this insurance is very important and is provided in several ways and extensions when it is usually a basic insurance that provides monthly compensation to the insured up to a ceiling of 75% of the salary. This rate of wages is given in a state of absolute work capacity which is a condition defined when the insured is actually unfit for work, and it is provided he worked until the incident or worked for 12 months prior to the insured event, and as a result of illness or accident the insured was deprived of at least 75%. In any profession or occupation in which he engaged before the incident, and he was also denied the opportunity to engage in another reasonable occupation appropriate to his education, experience and training.

As stated, there are extensions to the disability policy. These extensions are at an additional cost. An extension called a franchise is a monthly compensation payment at the end of the waiting period for the first two months of the waiting period.

Supplement for occupational expansion – the examination of the loss of ability to work will be in accordance with the insured’s occupation on the eve of the insured event. When the occupational extension to a specific occupation for a “white collar” – examination of his occupation on the eve of the insured event, the payment period will be as long as the insured is completely incapacitated for a specific occupation until the end of the insurance period.

When the occupational extension is for partial coverage for a specific occupation for a “blue collar” – an examination of his occupation at least five years before the occurrence of the insured event. The payment period will be as long as the insured is incapacitated for work for a maximum of two years according to this definition. The test will then be “according to another reasonable occupation” as detailed above.

In case of hospitalization – the insured will be entitled to the insurance benefits from the eighth day of hospitalization without the need for a waiting period provided that he is hospitalized for a period exceeding 14 days.

It is important to clarify – each insurance company and its disability insurance, although, in the vast majority of parameters, the companies are quite close (though not in the same way), and in extensions there are some changes between the companies. It is necessary, even obligatory, to understand the policy well, and the words in small print, so that there will be no surprises later on, and it is of course important to do a price survey. It turns out that costs can be reduced significantly.

A large part of the insurance companies provide additional extensions, including – coverage for security service or FDA operations: This coverage includes supplement to receipts from a government source resulting from damage due to security service and war or FDA events – up to 75% of salary, and no more than close compensation NIS 20,000 a month (depending on the company), whichever is lower. There is also maternity coverage that includes extensive insurance coverage for pregnant women, including pregnancy protection.

And what happens when there is a recurring loss of work capacity? If the loss of ability to work returned within a period of 12 months, due to the same illness or accident, the insured will not have to wait the waiting period again, as there is in the first / original loss of ability to work.

Beyond that, it is important to emphasize that there is usually income supplementation. This is a situation where the loss of ability to work is not complete, and the insured still works, but his wages are harmed. Insurance companies usually (make sure in the policy) pay the employee the proportionate share that affects his earnings, but there are certain restrictions and reservations, where many companies during the first 12 months from the beginning of the compensation payments, pay and pay only half of the employee’s salary

Insurance companies limit their liability in certain cases, including when it comes to attempted suicide or intentional self-harm. Also, the insurance is not valid when it comes to alcoholism or drug use unless the use is made according to a doctor’s instructions.

The insurance companies are also not responsible when the insured participated in the commission of an offense (or other illegal act), nor are they responsible in the event of war, hostilities, armed conflict. In any case the insured would not be entitled to compensation if he was the offending party and his disability was caused while he was no longer a danger.

Other exceptions that are not insured – extreme sports, flying, medical or surgical treatment, nuclear fission and more.

In case of hospitalization – the insured will be entitled to the insurance benefits from the eighth day of hospitalization without the need for a waiting period provided that he is hospitalized for a period exceeding 14 days.

It is important to clarify – each insurance company and its disability insurance, although, in the vast majority of parameters, the companies are quite close (though not in the same way), and in extensions there are some changes between the companies. It is necessary, even obligatory, to understand the policy well, and the words in small print, so that there will be no surprises later on, and it is of course important to do a price survey. It turns out that costs can be reduced significantly.

A large part of the insurance companies provide additional extensions, including – coverage for security service or FDA operations: This coverage includes supplement to receipts from a government source resulting from damage due to security service and war or FDA events – up to 75% of salary, and no more than close compensation NIS 20,000 a month (depending on the company), whichever is lower. There is also maternity coverage that includes extensive insurance coverage for pregnant women, including pregnancy protection.

And what happens when there is a recurring loss of work capacity? If the loss of ability to work returned within a period of 12 months, due to the same illness or accident, the insured will not have to wait the waiting period again, as there is in the first / original loss of ability to work.

Beyond that, it is important to emphasize that there is usually income supplementation. This is a situation where the loss of ability to work is not complete, and the insured still works, but his wages are harmed. Insurance companies usually (make sure in the policy) pay the employee the proportionate share that affects his earnings, but there are certain restrictions and reservations, where many companies during the first 12 months from the beginning of the compensation payments, pay and pay only half of the employee’s salary

Insurance companies limit their liability in certain cases, including when it comes to attempted suicide or intentional self-harm. Also, the insurance is not valid when it comes to alcoholism or drug use unless the use is made according to a doctor’s instructions.

The insurance companies are also not responsible when the insured participated in the commission of an offense (or other illegal act), nor are they responsible in the event of war, hostilities, armed conflict. In any case the insured would not be entitled to compensation if he was the offending party and his disability was caused while he was no longer a danger.

Other exceptions that are not insured – extreme sports, flying, medical or surgical treatment, nuclear fission and more.

Disability insurance – the reform
On August 1, 2017, a reform of disability insurance will take effect. The reform will be beyond a uniform policy, similar to the reform that was in health insurance, and what does it mean? Well, the goal is to create a uniform policy that will allow policyholders to easily compare the insurances of the various companies, thus actually increasing competition, there will be transparency, and the customer will know exactly what he is getting and how much.

Disability insurance – uniform policy

The uniform health policy was indeed successful – if in the past there was great confusion between the different policies of the insurance companies – each company provided a slightly different product and defined it as the best, and most lucrative, once there is a uniform, homogeneous, clear and transparent product, then it can be compared – Then the financial matter also becomes comparative – only when comparing oranges and oranges can the prices of the products be compared.

Just before the actual reform, the health care reform led the health agents to a campaign of persuasion in front of the customers in order to maintain the existing health policies (before the reform). The argument was that the reform would result in less good and more expensive insurance.

This is also the case now with work disability insurance policies – agents are trying to persuade you to make, leave or expand work disability insurance policies – not sure it is worth it to you. In any case, the new policies did not come

And additional conditions of disability insurance – basic package:

The maximum monthly compensation amount – for employees, the amount will be 75% of the average salary insured in the policy, linked to the index. The average wage will be calculated according to the average wage in the 12 months or in the 3 months preceding the insured event, whichever is higher.

For the self-employed – the maximum amount of compensation will be 75% of the average income from the insured’s work in the twelve months preceding the date of the insured event or in a shorter period if it is the first insurance year, index-linked.

The waiting period will be defined as a period of 3 months from the date of the occurrence of the insured event, except in cases of specific medical exceptions.

Loss of working capacity – In the event of loss of working capacity due to the same illness / accident within 12 months from the date of cessation of payments, the insured is entitled to the payment of insurance benefits without an additional waiting period.

Exemption from premiums – An insured who is entitled to insurance benefits will receive an exemption from the payment of the premiums for all the insurance coverages included in the policy, while keeping the coverages valid.

Exemption from deposits – An insured who has purchased coverage for loss of ability to work within the framework of the pension fund or executive insurance will receive an exemption from the premium and in addition the insurance company has a role for him in the current savings savings during the period of incapacity. And what will be the amount of the deposits? Depending on the release rate purchased by the insured.

Medical underwriting in increasing the insurance amount – No medical underwriting will be required in the event of an increase in the insurance amount due to a real increase in salary / income. What is a Real Growth? A real increase is defined as an increase of up to 15% per year, but no more than an increase of 60% in 5 years.

Income when receiving insurance benefits – An insured who is in a state of incapacity for work and receives insurance benefits may have additional income from an occupation that does not meet the definition of a reasonable occupation (including maternity benefits), without his entitlement to insurance benefits being revoked. The other income will be deducted from the monthly compensation. However, and this is very important – it will not be possible to deduct from the compensation passive income of the insured.

Offsetting the number of disability insurance – and what happens if you are insured with a number of disability insurance. Well, an insured who is entitled to compensation from insurance companies, or insurance companies and government agencies at a rate in excess of 100% of his average income, then the insurance company may offset the compensation so that it stands at 100% of the average income.

And if the insured is unemployed, and is between jobs? In such a case – if it is for a period not exceeding 12 months or is in a temporary risk arrangement at the time of the insured event, according to the longest period between them, and as long as the coverage for loss of ability to work is not canceled, the insured will be entitled to monthly .

For an insured who is between jobs for more than 12 months, but the disability insurance is not canceled, then the insured is entitled to monthly compensation according to the occupation in the months before he stopped working and income in the months before he stopped working or minimum wage – whichever is lower.

Coverage while staying abroad – the policy cannot be limited in the event that the insured is abroad.

Vocational Rehabilitation – The insurance company may offer the insured to undergo vocational rehabilitation at its expense, but the insured has the right to refuse this offer. In any case, in the event that an insured has undergone vocational rehabilitation, and can engage in an occupation that does not meet the definition of a reasonable occupation – his entitlement to insurance benefits cannot be denied, but only his income deducted from the compensation.

Transfer between employers – When transferring between employers or when an employee becomes self-employed, the rights of an employee insured in the policy will be preserved and there will be no need for a new medical underwriting.

So far basic insurance, but what do the extensions include?

How much will a disability policy cost?
The uniform policy for loss of ability to work is expected to increase by 30% or more compared to the existing policy. But this increase in prices this time is justified – you, the insured, get much more. The uniform policy, and here are examples – insurance companies will also be required to pay for partial and not just full incapacity for work (as was the case in previous policies); The waiting period until the money is received will be limited to 3 months; The insurance companies will be required to pay until retirement age, and they will also be required to pay in place of the insured his pension provisions. And the amount for loss of ability to work.

Also, under the uniform policies the insurance companies will not be able to involve the transfer of the pension savings with a breach of the conditions of disability insurance. And these are just (main) examples there are further differences between the uniform policy and the previous policy. Very simple – the Capital Market and Insurance Authority has required companies to give a kind of uniform minimum to everyone.

It is important to emphasize – disability insurance is one of the insurances that the insurance companies do not like to pay, they find ways to reject a significant part of the insured in various claims, probably simply because it is expensive insurance (expensive for companies).

The increase of 30% or more is at the official rate, but here there is a (not very pleasant) surprise for employers. Employers are the ones who most often purchase disability insurance for their employees, and insurance companies used to give them (thanks to their size, and other insurance agreements provided by agents, including access and receipt of employees ‘pension savings – agents’ golden egg) benefits and discounts on these insurances. But it has already ceased, both thanks to default pension funds and according to the guidelines of the Treasury and the Capital Market and Insurance Authority to avoid conflicts of interest in this regard. Hence the price of disability insurance compared to the price that was in the past may rise much more than 30%, it can also reach a price double and more.

The meaning of the introduction of the new and uniform policies is that there will actually be two insured with different coverages. The insured in the old policies will continue to have less good terms, alongside the insured in the new policies, who will pay more and receive more.

Disability Insurance – Extensions
So first it is important to clarify – you can, do not have to make the extensions and you can cancel the extensions at any given moment. You must also get information about each extension individually including its pricing.





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