If you work in the trades, like a framer, carpenter, electrician, mechanic, farm worker, etc. you might have found it either difficult to get disability insurance in the past or very expensive. That is because disability insurance is based on occupational risk as well as your personal health risks and lifestyle choices (like smoking or not smoking). If you are in a high risk job, like being a lumberjack, it can be almost impossible to get disability insurance, and if the insurance company offered you a plan it would be hugely expensive: up to 10% of your annual income.
So, how can you design a plan that covers your risks of injury and illness and protects your family and lifestyle? One solution is to create a split plan with injury only disability Insurance and a critical illness insurance policy for major life altering illnesses.
Injury Only Disability Insurance
There are disability insurance companies in Canada that have tailored their products to meet the needs of labourers, trades-people, truck drivers, and many other blue collar workers. Since many workers in physical labour jobs are more concerned with accidents and injuries, both on the job and off work, these disability insurance plans have split its coverage into injury only coverage and optional illness protection. The injury only coverage is much cheaper to buy than a comprehensive disability plan covering both illnesses and injuries. It can often be less than half the combined premium for just the injury protection.
The other goods news about injury only disability insurance is that there are hardly any qualifying medical questions to get the policy. Basically, you have to currently not be disabled due to an injury, and if you had a pre-existing injury, that condition will not be covered for the first 12 months. Besides that, you can get the coverage easily and quickly, and cheaply!
OK, so one big risk is covered…injury causing loss of work and income. How about an illness?
Critical Illness Insurance to Replace Lost Income
Using a critical illness policy to supplement lost income is another great way of getting a type of disability income insurance. Now, a critical illness policy technically is NOT a disability insurance policy. It does not cover things like pneumonia, fibromyalgia, chronic cough, etc. What it does cover are major life altering illness and injuries that can keep you off the job for months, if not years: cancer, heart attack, stroke, by-pass surgery, MS, Parkinson’s, spinal damage, organ failure, etc.
If a common disability policy including illness protection had a 90 waiting period, meaning your benefits only start after 90 days of paying your own bills, what types of illnesses would keep you away from work for that long? Well, the most common types would be the illnesses included on the critical illness insurance list. Also, critical illness insurance pays out after 30 days, not 90 days. All benefits are paid LUMP SUM and TAX FREE!
For most people in Alberta in this situation, a plan that covers two years of gross income is substantial insurance coverage. That means, if you had a heart attack, 30 days after diagnosis we would have a cheque for you for twice your annual gross income to put into your bank account. That should last you for about 3 years of income replacement (because you do not have to pay tax on that money).
A critical illness policy is usually much less expensive than illness protection on a disability insurance policy. Combining the premium savings on the injury only disability insurance and a lower cost critical illness insurance policy, you can feel confident you are well insured from things like a fall, car accident, heart disease, cancer, brain injury, etc.
This solution has worked well for many blue collar workers and trades people. Putting together a non-traditional solution for disability/income protection insurance has saved clients a lot of money in annual premiums (usually $600 – $1,000 per year). It provides an even greater level of protection from major illnesses that could affect you, and you know that injuries suffered on the job or away from work will also be insured.