disability vs critical illness

Disability VS Critical Illness: What is the Difference?

When you hear the words ‘disability’ and ‘critical illness’ in the same sentence, confusion often follows. Your living benefits are usually complicated, as they have more moving parts than others. A part of the reason it’s misunderstood as a mysterious topic is that it’s just not that much fun. I can think of a million other things I’d rather think about instead of living benefits and all it entails. Fortunately, disability and critical illness aren’t too difficult to comprehend once the topic is broken down – so let’s get to it!

To summarize the two together, this type of insurance is designed to protect your assets. Your assets can undoubtedly include your savings as well as yourself. While you may not need to insure particular body parts like professional athletes or celebrities, you’ll still want protection if you cannot work due to an illness or injury. Critical illness and disability are similar because they can help you and your family solve financial worries in a difficult situation.

Disability Insurance

This coverage is often a monthly payment that helps to replace your income if you can’t work due to an injury or illness. It can help you and your family pay for necessary expenses like your mortgage, car payments, utilities, groceries, etc. If you are self-employed or your work does not provide a group plan, this coverage can help replace your income to maintain your standard of living should an accident occur. Many people usually have this coverage through their workplace group benefits plans. However, your workplace plan may not be sufficient for your needs, so it’s good to determine the amount of coverage you have early on. For example, do you have short-term or long-term disability coverage?

Critical Illness Insurance

Coverage is provided as a one-time lump sum payment. It’s designed to use any way you want if you experience a severe medical condition such as a heart attack, cancer, or stroke. When your self employed, you have full control over how much money you make. If you become ill and unable to work, critical illness can help ensure you and your family are looked after. Not everyone’s recovery is the same so the costs wouldn’t be either. In addition to losing income, you may experience the recovery costs associated with assistive devices or additional travel costs. Thanks to breakthroughs in medical technology, the chance of surviving a severe medical condition has increased – but you also have to consider medical technology’s costs. For example, health plans do not cover the costs of medication or specialized equipment.

What is the cost of lost income?

If affected by a fire, the cost of your home or car might not seem so bad compared to the financial challenges of losing your income. Over the long run, lost wages can significantly affect any family. For example, if you make $50,000 annually, you would make approximately $1.5 million throughout a 30-year career – and that’s not accounting for salary increases. When a family member contracts an illness or disability, the loss of their income can strain your budget with unexpected expenses you didn’t account for. For example, you may need in-home care, prescriptions or renovations to make your home more accessible. See what I mean? Your vehicle expenses are rather pale in comparison.

The likelihood of it happening to you

Unfortunately, a disease or an accident can happen at any time. Worrying about finances is the last thing you need, should the unexpected happen. On average, 2 in 5 Canadians will develop cancer in their lifetime. According to a study by Empire Life, 555 Canadians will be diagnosed with cancer daily.

Disability is also more common than you think. Canada Life reports that a quarter of Canadians will be unable to work due to an injury or illness for an average of 90 days before they reach the age of 65. If the liability lasts longer, the average length is six years. Government programs like the Canada Pension Plan (CPP) and Workers’ Compensation can help, but you’ll need to meet certain conditions to qualify.

Many people diagnosed with a critical illness may still be able to work and are ineligible for benefits under their disability insurance coverage. On the other hand, if you break your leg and are unable to work, but all you have is critical illness insurance, you might struggle to make ends meet. 


For the complete protection plan, it’s essential to consider having a disability and critical illness when discussing living benefits. Want to connect with an advisor to review your current plan or ask for a non-obligation quote?

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