I remember going to a dinner & learn event at school in my last year to learn about what to expect after graduation. I went because I wanted to know how to pay off student loans quickly but what stuck with me was the concept of having an individual disability insurance. I walked out of that event making a mental note to make it a priority to get one within the first year of my career. I purchased my disability insurance exactly a year ago and here are FIVE reasons why:
1. If I can't buy a house or a car without insurance, then I shouldn't skip the insurance that will protect my most valuable asset
I think our most valuable asset is our ABILITY to earn an income. A disability insurance will provide a source of income (60-70% of gross earnings) if I'm unable to work due to injury or illness.
2. The risk of disability is higher than I thought
Most people with disabilities are not born with their disability.
3. Costs add up over time and EI benefits might not be enough
According to RBC Insurance, the average length of a disability over 90 days is 35 months. Will I have enough savings on hand to cover living expenses for 3 years on top of additional medical expenses related to disability? Even if I were to save up that much money, do I really want that much sitting in a savings account instead of investing? In Canada (as of 2020), one could receive 55% of insurable earnings up to a maximum of $573/week. This is more than enough to cover the basics for sure, but investing might be difficult.
4. Own Occupation
Own Occupation is a rider that is available to me as a pharmacist. Having this option means that if I can't work as a pharmacist, then I'll be able to receive benefit payments. If this wasn't an option then I probably wouldn't have been as quick to secure a disability insurance.
These professionals are able to have Own Occupation if desired at RBC Insurance (I'm not sponsored! It was part of my research when I was looking for one).
5. Discount & Savings on Premium
The younger you are, the cheaper the premium. Also, insurance companies classify occupations based on risk. The riskier the job (perceived higher probability of becoming disabled), the lower the occupational class and therefore the higher the premiums. It goes the other way too and it so happens that pharmacists are usually classed higher. This means I can have one of the cheapest rates for disability insurance! And last but not least, I was able to secure a 25% discount for my policy (for the life of my policy not just a limited time) because I purchased the policy within a year of graduation. I don't think they advertise this discount but definitely ask!
If there's an interest, I may do another post about what to look for in a policy. I had quite the process and there was a lot of back and forth between me and my agent before I agreed to a quote.
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