Get a free, no obligation personal loan quote with rates as low as 6.99%
Get Started You can apply with no effect to your credit score

We insure our cars, homes, and health, but what about our income? The income you make is only available when you’re available to earn it. If something bad were to happen to you (knock on wood!), there is a chance that you may not be able to earn the income you usually do. As you can imagine, this can be problematic if your regular income is imperative to daily life. Let’s explore what income replacement benefits are and how you can gain access to them.

How to tell if your insurance agent is misleading you? Click here to find out. 

What Are Income Replacement Benefits?

Due to the high cost of living in Canada, many families rely on two incomes and would struggle financially if they had to live off of just one income. As for individuals, many cannot afford to live without a steady income. In the tragic event that you for a family member becomes incapacitated, injured or, dies, income replacement benefits replace the income that the individual would regularly earn. The idea is to insure the income of a person to protect them from financial hardship on top of a tragic event, which is a struggle on its own.

It depends on the insurance plan you have and the provider, but you would be eligible for income replacement benefits under circumstances such as a car accident or workplace accident. Virtually any scenario where you or a family member were injured, emotionally distraught, or deceased resulting in an inability to work would result in income replacement benefits kicking in.

The True Cost of Borrowing
Do you know what the true cost of borrowing is? Find out here. 

How Do I Gain Access to Income Replacement Benefits? 

You have two options for income replacement benefits: an insurance company or the government. Unfortunately, relying on the government is not always wise because you may not qualify for benefits depending on your situation. Going through an insurance company has more security and reliability, but it comes with a price. 

Insurance Company

Insurance of any nature is obtained from insurance companies, such as Manulife or Sunlife. This form of insurance is secured through your employer, if they offer it, or on your own. 

If your employer offers you an insurance and benefits package, check to see if income replacement benefits are included and to what extent you’re covered. If income replacement benefits are provided by your employer, then you’re all set! If not, don’t worry, you can still get the income replacement benefits you want. Reach out to an insurance company of your choice to see what income replacement benefit offers they have. It is wise to obtain several offers, compare them and go with the best option. 

14 insurance terms everyone needs to know, check out this article.

Ontario Income Replacement Benefits

Ontario has a piece of legislation called Statutory Accident Benefits Schedule. If you are injured in a car accident, this piece of legislation provides monetary relief to those who need to take time off work as a result of the accident. There are some requirements that you must meet before you receive monetary relief. In addition, you will receive 70% of your regular income capped at $400 per week. There are other benefits available for those who are caregivers or non-earners. For more information, look up the requirements and other information on your local government website.

Other Provincial and Territorial Income Replacement Benefits

Similarly to Ontario, if you are injured in a car accident, you are usually eligible for income replacement benefits within your province or territory. For more information, look up your province or territory’s specific legislation and requirements related to income replacement benefits. 

You may be eligible for other monetary relief and benefits from the government depending on your circumstances. If for any reason you cannot work, other than a car accident, it is possible that you can receive money from the government to help you in your time of need. As the specific of this depends greatly on your unique situation, it’s important that you research the federal and provincial laws for monetary relief specific to your case. You can also consider reaching out to a lawyer to determine what your options are.

Spring Clean Your Finances
No matter the season, it’s always a good time to spring clean your finances. Learn how here. 

How Much Do Income Replacement Benefits Cost?

As with most things, the cost depends on the insurance plan you want and the provider. In addition, it also depends on you specifically because insurance companies always take age, gender, income, and many other factors into consideration. However, a good rule of thumb is $100 per month.

Are Income Replacement Benefits Worth It?

Insurance can seem like an unnecessary expense as you never know if you will actually need it or not. After all, you’re spending your hard-earned money on it, so the insurance better be worth it, right? 

Generally speaking, income replacement benefits become more important when the money you make is crucial to others, not just yourself. For example, if you or your family relies on the money you make to survive, insurance for your income becomes more important. On a more specific level, the need for income replacement benefits depends a lot on your current financial situation, goals, and lifestyle. While some would benefit immensely from income replacement benefits, others may not. 

Final Thoughts

Income replacement benefits can take your mind off of financial hardship in an already difficult scenario. However, if you’re fortunate, finances may not be a concern if something were to happen to you. Whatever your case may be, considering income replacement benefits is worthwhile, regardless if you proceed with them or not. 

Veronica Ott avatar on Loans Canada
Veronica Ott

Veronica is a writer who specializes in creating unique and educational personal finance content. She has extensive experience writing blog posts for companies in the financial sector. Veronica's background is in accounting as she graduated from Western University in 2017 with a degree in accounting. She is passionate about using her accounting expertise to help others with their personal finance questions and issues and enjoys using her writing to educate Canadian readers. When Veronica is not writing, she enjoys film, reading, travelling, going to the gym, and listening to music.

More From This Author

Special Offers

More From Our Experts
Canada Fed Deposit: Payment Dates And Eligibility 2023

By Corrina Murdoch
Published on September 20, 2023

The Canada Fed Deposit or EFT Credit Canada appears on a bank statement. It happens when the federal government pays the CCB, CWB and
The Best Paying Jobs With The Government: No Degree Required

By Lisa Rennie

Are you looking for a high paying job but don't have a degree? Check out the CBSA salary and other government jobs.
Neo Credit | Neo Financial Credit Card Review

By Corrina Murdoch

The Neo Financial Credit Card makes both spending and saving rewarding for Canadian consumers, regardless of their financial health.
Alternative Mortgage Financing In 2023

By Bryan Daly

Alternative lenders can provide all Canadians with the opportunity to become homeowners, keep reading to learn how they can help you too.
Home Equity Line Of Credit vs. Private Second Mortgage

By Lisa Rennie

If you're a homeowner needing a loan, consider tapping into your home equity. Even with bad credit, you can get a private second mortgage.
Find Out How You Can Get Free Legal Advice With Pro Bono Ontario

By Lisa Rennie

Lawyers aren't cheap, and many Canadians aren't able to afford their services. Check out Pro Bono Ontario for free legal guidance.
Can You Get Jobs That Pay Cash In Canada?

By Savanna Craig

Whether you're looking for jobs that pay cash or have a job that pays cash, it's important to understand your rights and obligations.
Best Credit Cards To Build Credit 2023

By Lisa Rennie

The top credit building credit cards available to Canadian consumers looking to improve their credit score.

Recognized As One Of Canada's Top Growing Companies

Loans Canada, the country's original loan comparison platform, is proud to be recognized as one of Canada's fastest growing companies by The Globe and Mail!

Read More

Why choose Loans Canada?

Apply Once &
Get Multiple Offers
Save Time
And Money
Get Your Free
Credit Score
Expert Tips
And Advice

Build Credit For Just $10/Month

With KOHO's prepaid card you can build a better credit score for just $10/month.

Koho Prepaid Credit Card