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.
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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.
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 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.
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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.
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.
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.