The bottom line is that rich Canadians want features and benefits that standard health plans don’t provide – and they aren’t worried about incurring additional costs.
Disability coverage is designed to protect what is perhaps a person’s most significant asset – their ability to earn a living. Policies typically pay out a portion of one’s income if they are unable to work because of an illness or injury.
Most long-term disability policies, however, offer a low maximum, usually $10,000 a month, which is insufficient to meet the needs of high-income earners. Depending on how the premiums are paid, this amount can be fully taxable, further reducing how much policyholders receive.
For high-net-worth individuals, taking out high-limit disability insurance is a better option. Such policies can provide up to $150,000 monthly or $2 million in annual coverage tax-free.
How does disability insurance work?
Disability insurance provides financial protection if the policyholder suffers an unexpected illness or injury that leaves them unable to work or earn a living. Also referred to as income protection insurance, these policies pay between 60 percent and 85 percent of a person’s regular income. This is until they recover and resume working or until the end of the coverage period, whichever comes first.
