JUST GOT... SICK
The risk of a disability during your working life is a lot higher than the risk of dying, though the latter is, of course, inevitable. And it doesn’t have to be you who gets sick: it could be your spouse or a child and you have to take time off to be with them. Aside from the loss of income, don’t forget that Canada’s universal health-care system does not cover prescription medication. You might also have to travel for special treatments if you live outside of a major centre — or perhaps even if you do. “Many people do not have any disability insurance and, particularly if you are self employed, this is a bad decision,” Rechtshaffen says. But it’s a decision that is often made or, more accurately, not considered.
We are forced to pay car insurance and though it is not mandatory on our homes and our lives, most people get some. We also insure jewelry and others assets, but then turn a blind eye to our biggest asset: our ability to work. “If that’s jeopardized, it’s not just your one year at, say, $80,000, it’s $80,000 for the next possibly 15, 20 years, plus any increases that would have happened, plus the loss of purchasing power because of inflation, and that ends up in the millions,” La Gamba says. “You don’t want to be putting yourself further into debt when there aren’t any prospects of your income coming back. If you’re disabled, things change instantly.”
You’re probably looking at a minimum monthly payment of $200 if you’re not covered by your workplace, which adds up over the course of a year. The exact amount will depend on your current salary, how much of it you want to cover and for how long. Then again, that monthly $200 family dinner, or something similar, could cover it. Britton says that buying disability insurance might be better off being treated like an emergency fund: figure out what you need to get through three to six months. It may be tempting to get as much replacement income coverage as you can, but that will cost a lot more in the short term. “I don’t need enough coverage to get me from where I am today to my financial destination,” he says. “I need enough coverage to get through this bit of a storm until we get back on track.”
Just keep in mind that it’s much better to set up a plan when you’re younger, because the older you get, the more expensive a lot of the options are and sometimes those options no longer exist.