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What is your most valuable asset? Is it your home? How about your investment portfolio? In reality, neither is true. Your most valuable asset is your ability to earn an income. If you can’t work, you won’t be able to pay your mortgage or rent, buy groceries, pay your bills, or save for retirement.
That’s why you need long-term disability insurance coverage to protect your earning ability. Even if you become disabled due to an illness or injury, you would still receive a tax-free monthly income for as long as you cannot work.
Canada Life is the largest of the life insurance companies that offer individual disability plans. But how do its insurance policies compare to the competition? Read on to find out.
About Canada Life Insurance
The Canada Life Assurance Company, also known as Canada Life, was founded in 1847 by Hugh C. Baker in Hamilton. In 2003, it was acquired by Great-West Lifeco group of companies, joining London Life Insurance Company and Great-West Life. Since Great-West is a subsidiary of Power Financial Corporation Group, Canada Life is also a member of the Power Corporation group of companies.
On January 1, 2020, the three life insurance companies—Canada Life, Great-West Life Assurance Company, and London Life Insurance Company—amalgamated to become one larger company: The Canada Life Assurance Company. Today, Canada Life serves over 13 million people across Canada through its numerous product lines, including insurance, wealth management, and benefits.
On the insurance front, besides long-term disability insurance, Canada Life also offers:
- Life insurance, including term and whole life
- Critical illness insurance
- Health and dental insurance
- Creditor insurance
- Segregated funds
- Payout annuities
As Canada’s earliest provider of permanent life insurance policies, Canada Life has distributed dividends since 1848, even in difficult economic times.
Key facts about Canada Life Insurance
AM Best Rating: A+
Head office: 100 Osborne St N, Winnipeg, MB, R3C 1V3
Website: https://www.canadalife.com/
Contact phone number: 1-204-946-1190
What Disability Insurance Plans Does Canada Life Insurance Offer?
Canada Life offers two main long-term disability plans: the lifestyle protection plan and independence plan. Both will provide a monthly benefit when you can’t perform your job duties due to an illness or injury. However, there are many differences between the disability benefit they provide.
Lifestyle protection plan
The lifestyle protection plan is Canada Life’s flagship disability plan. In case of a total disability, it pays a tax-free monthly benefit of between 50% to 80% of your income after a short waiting period.
Although the waiting period can be as short as 30 days or as long as 730 days (two years), the sweet spot is 90 or 120 days. That’s because a waiting period shorter than 90 days costs too much, and anything longer than 120 days will cause significant financial stress in a disability claim.
Available benefit periods include 24 months, 60 months, 120 months, or to age 65. Choosing age 65 as your benefit period will offer the highest protection against a long-term disability claim.
- Pros:
- A highly customizable plan allows you to choose riders that fit your needs and budget. For example, you can add the residual disability and partial disability benefits so that you receive a monthly benefit even if you're not totally disabled.
- As a non-cancellable policy, you are guaranteed to pay level premiums until age 65. Also, Canada Life cannot cancel your disability policy or reduce the benefits. This is the strongest guarantee that you can get.
- As long as your occupation class is 4A or 3A (e.g. doctors, lawyers, dentists, architects, computer programmers, consultants, engineers, business executives, etc.), you can get the own occupation rider.
- It has many built-in benefits, like catastrophic disability insurance to expand your disability benefits in case of a devastating permanent illness or injury.
- You can potentially upgrade your occupation class by two levels if you qualify based on your income and experience.
- Cons:
- Because of the guarantees provided, the underwriter will scrutinize your health, lifestyle, occupation, and income closely to determine if you qualify for disability insurance coverage.
- The cost of living rider, which increases your monthly benefit by inflation each year you're on a disability claim, is capped at 3% for the default option. Therefore, you'll have to pay more for the 8% limit.
- Some occupations present unusual hazards that make them uninsurable. For example, taxi drivers, actors, and day traders are just some occupations that can't buy the lifestyle protection plan.
Independence plan
The independence plan offers affordable injury-only disability coverage for lower-income occupations, home-based workers, part-time workers, seasonal workers, and the newly self-employed.
- Pros:
- Because underwriting is not as strict as the lifestyle protection plan, it's easier to qualify for the independence plan.
- It provides flexibility if you don't want disability benefits for illnesses since it's an optional add-on.
- Unlike other disability plans, it doesn't charge different premiums based on occupation. Therefore, you may benefit from a lower premium if you work in a high-risk profession.
- Cons:
- On a per unit of coverage basis, it is more expensive than the lifestyle protection plan.
- Because it only offers a maximum monthly benefit of $3,000, most people making more than $50,000 will find the disability coverage insufficient.
- The cost of living benefit increases your monthly benefit by inflation every year. However, note that it is simple and not compound interest like with the lifestyle protection plan. This would significantly impact your monthly benefit in case of a long-term disability claim.
- Partial disability benefits only pay for nine months.
Here is a table comparing the products side by side:
Lifestyle Protection Plan | Independence Plan | |
|---|---|---|
Target market | Broad coverage designed for professionals, business executives, employees, tradespeople, and self-employed | Designed for lower-income occupations, home-based workers, part-time workers, seasonal workers, new business owners |
Covers | Injury or illness | Injury only with illness add-on |
Definition of disability | Regular occupation for two years (can be extended to the entire benefit period) | Regular occupation for two years |
Age eligibility | 18-60 | |
Occupation classes | 4A, 3A, 2A, A, B | None |
Occupation class upgrades | Yes | N/A |
Waiting periods | 30, 60, 90, 120, 180, 365, or 730 days | 14, 30, 90, or 120 days |
Benefit periods | Two, five, 10 years, to age 65 | One, two, five years, to age 65 |
Minimum coverage | $500 | |
Maximum coverage | $25,000 | $3,000 |
Medical exam required | Yes, above a certain age and amount | No |
Premium guarantee | Guaranteed level rates to age 65 | Not guaranteed |
Expiry | None | Age 65 |
Riders | Own occupation, regular occupation extender, residual and partial disability, future insurability, cost-of-living, catch-up, first day accident, return of premium, lifetime benefit—accident and graded sickness, accidental death and dismemberment, health care profession | Accidental death, future insurability, cost-of-living |
Disability insurance products for businesses
Besides personal disability insurance products, Canada Life also provides disability insurance solutions for business owners.
Business overhead expense: If your business depends on you to generate revenue, an overhead expense plan can cover operating expenses, allowing you to keep your business running while you focus on recovery.
Wage loss replacement plan: By organizing disability insurance policies under a common plan, an employer provides superior disability coverage compared to group insurance at a fixed cost.
Buy-sell disability insurance: Provides the funds for you to purchase the shares of a disabled partner.
Key person disability insurance: Protects your company from lost sales or high replacement costs when a key employee becomes disabled.
How Much Does Canada Life Disability Insurance Cost?
The cost of disability insurance depends on several factors. Your age, gender, smoking status, occupation, and plan type all affect your premiums. For example, older people have a higher chance of becoming totally disabled, so premiums cost more for them.
Also, you have multiple rider options to choose from, which will increase your costs. For example, the future insurability option lets you buy additional coverage as your income rises without medical evidence of good health.
Below is a table showing the monthly premiums for the lifestyle protection plan. The sample insured is a non-smoker in a low-risk occupation like a doctor or lawyer. It pays $5,000 in monthly benefits in the event of a total disability payable after 90 days of a disability until age 65. Riders include the regular occupation period extender and residual and partial disability benefits.
Age | Male | Female |
|---|---|---|
25 | $88 | $144 |
30 | $96 | $174 |
35 | $111 | $199 |
40 | $136 | $222 |
45 | $168 | $255 |
50 | $218 | $299 |
55 | $283 | $354 |
As you can see, the premium increases gradually as you get older. If you want to benefit from lower rates, buy the insurance policy while you’re young. You’ll lock in your rates until age 65, so you don’t have to worry about exorbitant costs down the road.
Verdict: Our Canada Life Disability Insurance Review
The two disability plans that Canada Life offers cover the vast majority of occupations and work arrangements. Whether you’re newly self-employed, looking for disability insurance because your employer doesn’t have any coverage, working more than one job, or are in another unique situation, Canada Life has a disability insurance plan for you.
In our Canada Life insurance review, we point out some of the things that Canada Life disability insurance does well and some areas where it lags.
- Pros:
- The financial stability of disability coverage being offered by one of the largest life insurance companies in Canada, which paid out over $172 million in disability claims in 2020.
- Industry-leading maximum amount of monthly benefit of $25,000 for high-income earners.
- A program for new graduates of professions like engineers and doctors allows them to increase their benefit amount without medical evidence of good health as income rises.
- Of all the insurance companies to offer the return of premium rider, Canada Life has the best one.
- A graded premium option lets you pay lower premiums in the first five years of the policy, which is helpful if you're not yet established in your profession.
- One of only two insurance companies to offer a non-cancellable contract.
- Unique riders that you can't get with other insurers, like the lifetime benefit and catch-up riders.
- Cons:
- Some occupations are not priced as competitively as other insurers.
- The lengthy underwriting process for the lifestyle protection plan may be a turnoff for many applicants.
How Do You Sign Up For Canada Life Disability Insurance?
Like many other insurance companies, you must apply for Canada Life disability insurance through an insurance broker. Although you don’t have to be present in person with the broker, you must be able to confirm your identity with photo identification.
As for the application, that is done electronically via Canada Life’s online platform. Although the application is brief, it is followed by a telephone interview that can last between 30 to 40 minutes. You will answer questions about your health, medical history, and lifestyle during the interview.
Once Canada Life receives the information from the telephone interview, an underwriter will begin its assessment. As part of the underwriting process, the underwriter’s job duties consist of determining whether you meet Canada Life’s guidelines.
If you qualify, Canada Life Insurance will approve your application. Otherwise, it may offer you coverage at a higher premium or with modifications like exclusions and limitations. For example, if you have a history of back pain, you may be offered a disability policy with an exclusion for disabilities caused by back pain.
Need A Canada Life Disability Insurance Quote?
Statistics show that one in three Canadians will become disabled for 90 days or longer before age 65. Disability insurance works when you can’t, so you need to protect your income before an unexpected event happens.
Use the form below to get a disability insurance quote from The Canada Life Assurance Company. It takes 30 seconds to complete, and you will receive your no-obligation quote within one business day.
As another option, you can also email us at info@briansoinsurance.com or call 604-928-1628 for a free consultation. By assessing your needs, we can determine if a disability insurance plan from Canada Life Insurance is right for you or if another insurance company may offer more suitable disability benefits.
Get Your Disability Insurance Quote Now
While we make every effort to keep our site updated, please be aware that timely information on this page, such as quote estimates, or pertinent details about companies, may only be accurate as of its last edit day. Brian So Insurance and its representatives do not give legal or tax advice. Please consult your own legal or tax adviser. This post is a brief summary for indicative purposes only. It does not include all terms, conditions, limitations, exclusions, and other provisions of the policies described, some of which may be material to the policy selection. Please refer to the actual policy documents for complete details which can be provided upon request. In case of any discrepancy, the language in the actual policy documents will prevail. A.M. Best financial strength ratings displayed are not a warranty of a company’s financial strength and ability to meet its obligations to policyholders.
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