Q&A: Disability insurance
Question: I am 62 and plan on working another five to six years, do I need
disability insurance? My fees have gone up to $2,000 per year. I am working
on a visa in the U.S. and have some disability insurance through the company
I’m employed by but will eventually return to Canada and consult. Thank
you for your assistance. – Confused in Texas
Gordon Pape answers: Do you need disability insurance? No.
Should you have it? Only you can answer that question.
No one needs insurance, except when it’s required to obtain a mortgage
or drive a car. It’s really a matter of whether you want to have it for
the peace of mind it provides – and the financial support if something
Disability insurance is very expensive and can get even more costly as you
age and your risk profile changes. In my own case, it reached a point where
I felt the cost was not worth the protection and I dropped it.
You need to look carefully at your own situation and decide whether the coverage
is worth the premium. Start by assessing the benefits package carefully. What
will you actually receive from the insurer in the vent you do become disabled
– and what constitutes being disabled? How long will the coverage remain
in force – you’re 62 now; are you sure you won’t be cut off
If you drop the coverage and are unable to work in the future, do you have
a plan to replace the lost income? Although you are currently working in the
U.S., you should be eligible for at least a partial Old Age Security pension
at 65 when you return to Canada. You may also be eligible for some CPP benefits.
To what extent would they cover the loss of the insurance income?
Everything is a gamble, which is why insurance companies exist in the first
place. You have to decide whether to take the risk yourself or pay someone else
to do it for you.
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