Your income is the asset everything else rests on.

The arithmetic nobody runs

A thirty-year-old is considerably more likely to be off work for ninety days or more before retirement than to die before it. Yet life insurance is bought first, almost always, because it is easier to imagine and easier to sell.

If your income stopped for six months starting next Tuesday, what happens? For a household with no group coverage and under three months of expenses saved — a very common position — the answer is debt, then the line of credit, then the RRSP, then the house. Disability insurance is what stands between the injury and that sequence.

The clauses that decide whether a claim gets paid

Definition of disability

• Own occupation — you cannot do your own job. The strongest definition, and the most expensive.
• Regular occupation — your own job, but the insurer may reduce benefits if you work elsewhere.
• Any occupation — you cannot do any job you are reasonably suited to by education and experience. The weakest, and where many group plans land after 24 months.

For a welder with a shoulder injury, own-occupation and any-occupation are the difference between a paid claim and a declined one.

Elimination period

How long you must be disabled before payments begin: 30, 60, 90 or 120 days are standard. Longer means cheaper. Pick it against your actual emergency fund. Choosing 120 days because it saves $22 a month, when you have six weeks of savings, is a false economy that shows up at the worst possible time.

Benefit period

Two years, five years, or to age 65. Long-term disability is the whole point of the product; a two-year benefit period covers a bad injury but not a permanent one.

Non-cancellable versus guaranteed renewable

Non-cancellable means the insurer can never change your premium or your contract. Guaranteed renewable means they must renew you, but can raise premiums for an entire class of policyholders. For a thirty-year contract, that difference is worth understanding before you compare prices.

Taxable or tax-free — the number that surprises people

This is why a personally owned policy sized at 60 to 65 per cent of income can leave you better off than a group plan quoting a higher percentage.

Alberta trades and contractors

Workers’ Compensation covers injuries that happen at work. It does not cover the illness that puts you out for a year, or the injury you get at home on a Saturday. If you are an owner- operator who has opted out of WCB personal coverage, check what you actually have before assuming you are covered at all.