Most Canadian workers would suffer severe financial hardship if they were forced out of work with a disability, according to a recent RBC Insurance survey.
Specifically, 76 per cent of survey respondents believe that a disability preventing them from working for three months would have serious financial consequences for their families, such as significant debt or an impact on retirement plans.
Despite the concern, the survey found that only 27 per cent of respondents have discussed how a disability would financially impact their family.
“A long term disability can have serious consequences affecting one’s financial situation, including leaving insufficient funds to cover regular living expenses and/or delaying or reducing retirement savings,” say Mark Hardy, senior manager, life and living benefits, RBC Insurance, in a news release.
“Industry research shows that 26 per cent of Canadians say they could not pull together $2,000 over the next month if an emergency expense arose; and more than half of Canadians believe they would find themselves in financial difficulty if their pay was delayed by even a week. These findings emphasize the need for Canadians to ensure that they have the appropriate level of coverage in case of a long term disability.”
In total, just 16 per cent of respondents have individual disability insurance outside of any workplace coverage.
Among Canadian workers who do not buy individual insurance, 10 per cent don’t know what disability coverage is, while 22 per cent have not thought about their chances of becoming disabled.
If unable to work due to a disability, 34 per cent of respondents would dip into their personal to pay for essential living expenses, while others said they would rely on their spouse/partner’s income (29 per cent), government support (19 per cent) and cash in investments (16 per cent).
Fifteen per cent of respondents don’t know how they would pay for their living expenses if they were faced with a disability.
Here are some talking points for advisors who wish to discuss disability insurance with client and prospects:
- Disability insurance is less expensive than you might think — generally costing between one and three per cent of your income.
- Disability benefits would allow you and your family to maintain your income as though you were still able to work full-time.
- The best time to buy disability insurance is before an injury or illness occurs.
RBC Insurance commissioned Ipsos to survey Canadian workers on topics such as disability, disability in the workplace and disability insurance. The survey was conducted from July 14 to 18, 2014. In total, a sample of 1,000 Canadian workers were surveyed using Ipsos’s I-Say online panel.