Disability insurance

Written by

Disability insurance replaces loss of income during periods of unemployment due to injury or sickness.

Disability exists when the accident or illness (the condition) has occurred while the policy is in force. This  excludes pre-existing conditions, which are health conditions that the insured already has. Pre-existing conditions could increase the premiums charged or even prevent the issuance of a policy. The condition must require medical attention.  The insured is under the care of a doctor. The insured is not able to perform the essential duties of his or her occupation.

There are three types of disability income policies:

1. Cancellable Policy (also called a Commercial Policy)

Issued on a “class” basis. A class is formed when people are grouped together by age, gender, occupation, or type of plan. When the claims for the class are higher than anticipated, this type of policy can be cancelled, the premiums can be increased, the benefits reduced, or restrictions imposed by the insurer.

2. Guaranteed Renewable Policy

This policy is guaranteed to be renewed until age 55 and usually until age 65.  Premiums can be increased when renewed if there is a higher claims experience for the class but terms and conditions remain the same.

3. Non-cancellable and Guaranteed Renewable Policy

This has the highest premiums because it offers the greatest level of protection.  It is guaranteed to be renewed until the insured reaches age 65. The insurer cannot cancel the policy, increase the premiums, add restrictive riders, or reduce benefits. It can be converted to a guaranteed renewable policy, at age 65, if the insured is still working. How to Calculate Residual and Partial Disability. Residual disability is a rider on a disability policy that will pay a benefit when the insured is able to earn between 20% and 80% of his or her pre-disability salary by working. 

The formula for how much of the disability benefit will be paid is:

(pre-disability income – income while working) ÷ (pre-disability income) x 100 = % of benefit to be received.

How much disability insurance cost?

Click the banner to learn more:

Let us help you decide which insurance is best for you. We are happy to answer your questions.



  “This message is an expression of the author’s personal opinions. The Company will not be held liable in any way for the opinions expressed herein.”  

© 2020 All Rights Reserved by FINMARKET INC. ALL FINANCIAL ADVICE IS PROVIDED BY FINMARKET INC .FINMARKET INC. Owns and operates the website moneylesson.org and YOUTUBE CHANNEL FINANCIAL ADVICE. Finmarket Inc. makes no representations, warranties, or guarantees about, and assumes no responsibility for, the content or application of the material contained this youtube channel, website, video, Podcast or any media posted on any website and expressly disclaims all liability for any damages arising out of the use of, reference to, or reliance on such material. The information contained herein is for information purposes. Particular investment and Tax strategies should be evaluated relative to each individual’s objectives. Individual should always consult with their financial professional before engaging in any strategy or investment and understand that some strategies have higher risks and are not suitable for all investors.You should consult an specialist to evaluate your individual circumstances before engaging in any financial strategy.