Canadians unprepared for financial impact of disabilities

Most Canadian workers would suffer severe financial hardship if they were forced out of work with a disability.

In fact, 76% believe that should they become disabled and unable to work for three months, there would be serious financial implications for their family, such as significant debt or an impact on retirement plans, finds an RBC Insurance survey.

Read: Clients aren’t realistic about retirement needs

Despite the concern, only 27% have discussed how a disability would financially impact their family. This number does not increase substantially among workers who’ve indicated that they’ve taken time off in the past because of a disability (33%).

“Industry research shows that 26% of Canadians say they could not pull together $2,000 over the next month if an emergency expense arose; and more than half of Canadians believe they would find themselves in financial difficulty if their pay was delayed by even a week,” adds Mark Hardy, senior manager, Life and Living Benefits, RBC Insurance.

Read: Few Canadians buy disability, LTC insurance

Additional findings include:

• 16% have individual disability insurance outside of any workplace coverage;
• if they became disabled, 34% would dip into personal savings to pay for essential living expenses; 29% would rely on their spouse/partner’s income; 19% on government support; and 16% on cash in investments.

“The average length of a disability over 90 days is between two to three years,” notes Hardy. “Canadians should ask themselves ‘Do I have enough money saved to cover living expenses and health care bills throughout the entire length of my disability?’ “

Also read:

More tax support for clients with disabilities

How to insure risk junkies

Help clients with disabilities

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.