Inverse disability trend ‘incredibly surprising’

An RBC insurance survey has uncovered a worrying trend – as the number of Canadians who need time off work rises, disability coverage continues to decline.

RBC reported that the majority of working Canadians (68%) have some experience with time off work due to a disability, whether for themselves or a family member, or they know someone who has taken a disability leave.

However, the study also found that 50% of working Canadians said they would have liked to have taken time off work for a disability but felt they couldn’t afford it; a statistic that is up five points from 2018.

Despite the increase, the number of Canadians who have disability coverage either through their workplace benefits or personal insurance that they’ve purchased declined by five points from 55% in 2018, leaving half of working Canadians without any disability coverage at all.

“It’s troublesome to see an inverse trend between the number of Canadians who need to take time off for a disability, and those who have the coverage in place – or the finances – to do so,” says Maria Winslow, senior director, Life & Health, RBC Insurance.

“With half of the working population without disability coverage, many Canadians are exposing themselves to financial risk.”

She told LHP: “What we want to generate awareness of is that it leaves Canadian households at financial risk if this was to happen to them. [The inverse trend] is incredibly surprising and we wanted to make sure we start a conversation around what they can do to prepare.”

When faced with the possibility of becoming disabled and unable to work for three months, two-thirds (67%) of working Canadians agree there would be serious financial implications for them and their family. Despite this acknowledgement, less than half (43%) have had discussions with their family about how they would handle the financial impact of not being able to work for three months or more.

“Being off of work for a disability can have serious consequences affecting one’s financial situation, including having insufficient funds to cover regular living expenses such as your mortgage, bills and even groceries,” explains Winslow. “It’s important that Canadians talk with their family and take action so they are prepared for future financial implications of not being able to work.”

Most Canadians believe that support from family/friends (92%), having proper financial assistance (91%) and workplace support (87%) are all critical when suffering or recovering from a disability.

Yet, among those who indicated they took time off for their own disability, more than half (56%) said they were forced to go back to work earlier due to financial reasons (up five points from 2018), and nearly as many (45%) say they were forced back earlier because they were pressured to by their workplace, which is a significant increase from last year (33%).

Winslow puts the increase down to a rise in mental illness claims, the changing nature of disability insurance coverage through work and the rising number of people who are self-employed.

She added that it was vital clients understood how much coverage they have and how your group benefit plan defines a disability.

She explained: “Typically, it covers about 67%. So you have to sit down with your family and think about what you would do if you had to do without a third of your income on a monthly basis.

“How would you cover your mortgage, basic living expenses and pay for groceries. What does that look like in the construct of being off work for at least three months? Could you set some money aside and create an emergency fund?

“Finally, speak to an insurance advisor who can walk you through your options, which could be topping up your group coverage or considering individual disability coverage, which would cover up to 85% of your income.”

She added: “No one expects to be faced with a disability that would impact their ability to work. We all think we can push through it – we see that a lot with cases of mental illness.

“Being a leading disability insurance carrier, we know that when you have time to focus on getting well, you get better faster.”