The most valuable asset you may have is your earning power. Without disability insurance, you have to find other sources of income to replace your lost earnings due to a disability.
You probably don't think twice about insuring your car and home, but the most valuable asset you have may be your earning power. You will earn a total of $1,601,515 over the next 25 years if your annual salary is $50,000 with 2.00% increases per year. Is this $1,601,515 asset protected by disability insurance.
There is a greater chance that you will suffer a disability rather than dying before you reach age 65. For example, a male age 35 is 3.6 times more likely to become disabled rather than die before reaching age 65, while a female is 8.0 times more likely to become disabled.
If a disability lasts at least three months, it usually lasts much longer. For example, is a 45 year old male becomes disabled for at least three months, the disability is likely to go on for 4.0 years. For 45 year old females, the figure is 4.5 years.
Without disability insurance, you have to find other sources of income to replace your lost earnings due to a disability. Most of the alternative options, if they are available to you at all, may be quickly exhausted. That leaves disability insurance as the most viable solution for a long-term disability.
| Income Source | Why The Source May Be Insufficient |
| Spouse's income | Is the income enough to maintain your lifestyle? |
| Government Programs | You may not qualify for certain programs and benefits |
| Emergency Savings | Limited cash flow, not a long-term solution |
| Investments | You may not get true value when you sell |
| RRSP withdrawals | Fully taxable, erodes your retirement fund |
| Loan | With no income, a bank is unlikely to lend you money |
| Friends & Family | Are you comfortable asking them for help? |
| Downsize your lifestyle | Will your children be adversely affected? |
