This article on MoneySense explains the difference between long-term disability (LTD) and critical illness (CI) insurance policies so you can choose the best option for you.
Both pay you money in case of an illness or disability, but they do it different ways. Disability insurance provides a monthly income if you’re unable to work due to a serious injury or illness, while critical illness insurance pays out a tax-free lump sum payment following the diagnosis of one of several illnesses covered by your policy.
Regular pay if you can’t work
If you work for a large company, you likely already have some kind of long-term disability insurance. Typically, such a plan will pay you a set portion of your monthly income if you are unable to work. Payments end when you start working again, reach age 65, or die. Coverage differs greatly from one employer to another, and if you’re self-employed or you work for a smaller company, you may have no coverage at all.
A single payout if you get sick
A second option is critical illness (CI) insurance. You can buy a critical illness policy through an independent insurance broker and it will pay out a lump-sum benefit if you are diagnosed with one of the illnesses specified in the policy. The benefit is tax-free and receiving this benefit doesn’t affect the amount of disability benefits you may also be receiving. When you collect, there are no requirements as to how the money is spent.
If you suffered a permanent injury or you are involved in a disability benefits dispute, the Graves and Richard team can help you protect your rights and obtain the benefits you need to maintain financial stability. Contact us to schedule a free one hour consultation.