Many working Canadians are increasingly purchasing disability insurance today. It’s a great way to protect oneself from unexpected accidents and sickness at work that could leave you unable to work to earn an income.
Disability insurance in Canada comes in two forms; long-term and short-term disability insurance policies. Most workers prefer short-term disability insurance for different reasons. The most common reason being that short-term disability offers quick compensation benefits. It also favors self-employed Canadians.
Besides, employees can easily get this insurance through their employers. But although getting short-term disability insurance through work sounds cool for many employees, the coverage offered isn’t enough.
Take a look at some of the reasons why getting short-term disability insurance through work isn’t enough.
Provides Temporary Benefits
A short-term disability policy through your employer comes with benefits; however, the benefits offered under this policy are only temporary and not sufficient.
The coverage offered doesn’t go beyond 3 to 6 months, depending on the employer. If you are permanently disabled after this period, your policy won’t help with your financial situation.
Your employee will provide you with temporary compensation if you have sought short-term disability coverage through them. But still, this insurance won’t offer coverage if you sustained long-term injuries in the line of duty.
Short-term Disability Insurance Coverage Has Several Requirements
Getting short-term disability coverage through an employer can be a long process. Applicants are obligated to meet multiple requirements to get coverage. For instance, employees must qualify for the compensation three months before experiencing work-related injuries.
Coverage is also subject to certain limitations since the benefits are payable through the employer. Compensation is often denied in instances when an employee isn’t under treatment from an accredited and certified physician. Also, the insurer will withhold your benefits if they deem your injuries as self-inflicted.
Not All Injuries Qualify For Coverage
Short-term disability policies usually outline the accidents and injuries they cover. Policies obtained through work might not cover all possible injuries or illnesses that place employees at risk of disability.
For example, most policies cover common things like injuries, back pains, and accidents. If this is the case in your company, it means your employer would not compensate you if you suffered from an accident or injury not covered in your policy.
Disability Income is Taxable
Ideally, benefits offered by short-term disability insurance coverage shouldn’t be taxable. However, this provision is strictly applicable if a worker is paying their premiums directly to the insurer.
Benefits paid to a worker through their employer are taxable. Since the employer pays the employee’s premiums to the insurer, the employer is the third party in this case. Employers hardly include the monthly premiums they deduct from their employees in the latter’s annual wages.
Consequently, the benefits paid to injured employees are taxable. While you may expect the benefits to cover a huge chunk of your income, it won’t be enough in this instance. Coverage is ideally reasonably sufficient when employees are paying their premiums directly to their insurer.
Coverage Varies From Employer To Employer
Employers offer different levels of short-term disability coverage for accidents and work-related ailments. You might be tempted to assume that your current job’s benefits are the same as from your previous one. The employer offers you what’s stated in their policy and not necessarily what you deserve.
With short-term disability insurance through an employer, there isn’t a definite amount of compensation to be awarded. On the other hand, some employers don’t offer income support to employees, particularly in instances of non-work-related accidents or injuries.
Always check the level of coverage offered by your employer before seeking short-term disability coverage through them. You will mostly discover that the coverage level won’t be enough to alleviate your financial situation if you are disabled while at work.
It Doesn’t Cover The Full Income
An employee can provide short-term disability insurance to compensate an employee for their disability. Compensation, in this case, is conditional. It is done when disability stems from work-related reasons.
Ideally, compensation is supposed to cover an employee’s income when they were disabled and unable to work. However, an employer’s amount of coverage doesn’t’ replace an employee’s full income. It just caters to a certain percentage of their income. That said, coverage isn’t enough when short-term disability insurance is offered through your employer.
It would help if you had private short-term disability insurance to replace your full income. Purchase a nice short-term insurance coverage plan from an insurer. The insurer will pay a similar amount to your full income. Plus, the coverage provided by your insurer will be sufficient to clear your medical and other post-recovery-related expenses.
Getting short-term disability insurance through your employer can’t give you enough coverage for your disability. Switch to long-term insurance coverage for adequate coverage. Alternatively, purchase short-term disability directly from a trusted insurer.