Page 56 - A Canuck's Guide to Financial Literacy 2020

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Disability Insurance

Disability insurance is designed to provide you with a monthly income benefit if you become
disabled and can't work due to accident or sickness. Disability insurance should be an
integral part of every financial plan considering that 1 in 3 Canadians will be disabled for
more than 90 days. Many individuals tend to overlook disability insurance as they believe,
"it won't happen to me".

Applying for Disability Insurance

When applying for disability insurance, the insurance company takes in account
your morbidity risk which is the risk that you would become disabled during the policy year.

Occupational Schedule List

Your disability insurance premiums would vary depending on your occupation and the class
that your occupation falls in. Each insurance company has their own classes and
qualifications but the general trend is as follows:

• Class 4A - Class 4A tends to be the lowest risk classes. It includes professionals
who are well educated and have higher levels of income such as doctors, lawyers,
actuaries, architects, accountants, etc.
• Class 3A - Class 3A includes occupations that require no physical effort such as
business executives, senior management, etc.
• Class 2A - This class includes occupations that require certain skilled clerical or
technical work such as court reporters, surveyors, office workers, etc.
• Class A - Class A includes workers who specialize in a certain skill with physical
duties such as hair stylists and electricians.
• Class B - Class B tends to be the highest risk and covers the most hazardous work
such as carpenters, mechanics, roofers, etc. Each company approaches this class
differently.
• Class X - This class is for uninsurable individuals.

Disability Coverages

When applying for disability insurance, the policy holder can choose how they wish to be
covered and conditions that their policy will pay out benefits.

Own Occupation Policy
These types of policies provide coverage if the insured individual is unable to perform duties
of their specific occupation such as a heart surgeon. The surgeon may develop tremors