Understanding the Differences Between Injury Only and Injury and Illness Disability Policies
According to Statistics Canada, an estimated 4.27 million Canadians aged 12 or older suffered an injury severe enough to cause permanent or temporary disability in 2009/10, which is 15% of the population. Meanwhile, 10.4% of Canada’s population are disabled by illness at any given time.
Disability insurance typically comes in two major forms, ‘injury only’ and ‘injury and illness.’ The latter policy is more comprehensive and generally more expensive, as it covers both injury and illness-related disabilities. Some occupations may only qualify for injury coverage, but Neil Paton, president and CEO of The Edge Benefits, a disability insurance manufacturer specializing in small business owners and the self-employed, tells us his company may still be able to help in providing something for those who may not be eligible for a traditional injury and illness plan.
Neil Paton, president and CEO of
The Edge Benefits, takes you through
the differences between Injury Only
and Injury and Illness coverage.
“In general terms, there are some occupations that probably only would qualify for injury coverage,” he says. “Having said that, if you look through The Edge Benefits’ occupational guide, we are very broad in whom we will offer coverage to, and in most cases, the step from there to adding some illness coverage is generally not that difficult. The reason is we have intentionally excluded or limited some of the things that we feel are not essential to the coverage but are the more significant problems for companies offering illness. As a result, we’re able to offer illness in many more situations than any other companies can. This allows flexibility for whatever the client needs, and in most cases, regardless of their occupation.”
Further, according to Paton, injury only coverage does not generally require medical underwriting. “Accident risks are more predictable than illness risks,” he says. “Thanks to that, these risks can generally be classified in order to predict their incidence and duration. As a result, we are able to offer very affordable coverage for protecting yourself from those defined injury risks. Also, depending on earnings, we offer monthly injury benefits for as little as $1,000 a month up to $6,000, on a non-medical basis, which is very unique in the industry. We also cover strains and sprains as part of our injury policy, while the traditional coverage covers them only as part of an illness plan.”
There are a wide array of differences between providers who offer injury only coverage, but Paton says there are some fundamental keys to sussing out those differences.
“The heart of any contract is its definitions,” he says. “If you compare the various contract languages currently available in this market, I think you’ll find our wording, especially in regard to the definitions of ‘disability,’ to be more comprehensive than most traditional carriers in this marketplace.”
Other carriers often include clauses such as “independent of all other causes” or “as a result of an unforeseen event” to limit their exposure to claims that are not pure accident claims.
“We try to avoid that,” says Paton. “Our policy definitions are generally more clear and straightforward, and are usually based solely on your inability to perform the important duties of your regular occupation. When buying disability insurance, you need to carefully consider the definitions within each contract and interpret the potential outcome in the event of a disability. Your insurance advisor should be able to help with this through showing you the wordings, helping to assess the outcomes, and ultimately helping you make an informed decision. For example, some definition wording differences that you and your advisor may need to consider could include selecting between wording that indicates ‘unable to perform the important duties of your regular occupation,’ and wording that indicates a ‘complete incapacity’ in order to qualify. The unfortunate part is that often these important clauses are not brought to the surface as part of the decision-making process, and without the help from an experienced advisor, such language is often difficult to find, let alone understand.”
The Edge Benefits disability plans also have certain features that significantly separate it from most traditional disability plans. The Edge allows you to select injury and illness coverage independently while at the same time choose different waiting periods, benefit periods, and benefit amounts for each type of plan. They also have a coverage structure that really favours the self-employed.
“For those who are self-employed, we don’t just rely on net-earned income to determine how much coverage someone can qualify for,” says Paton. “We also offer what’s called a gross revenue option. This makes a significant difference, in that a lot of people who are self-employed have a high gross income, but after expenses, very little net earned income, which means that in many cases they could only qualify for $1,000 worth of coverage when they actually need $3,000. Through selecting the gross revenue option, we are generally able to offer much closer to the $3,000 needed, while traditional insurers offer only a fraction of that amount at $1,000.”
Plus most of their products are guaranteed issue, so they don’t have the underwriting challenges that traditional providers do. And even for those products that do require some underwriting, such as illness coverage, their application process is very simple, on one page, and is issued at an industry leading issue rate in a fraction of the time it takes to underwrite a traditional illness policy.
“Those are just a few of the differentiators that set us apart from traditional disability insurers in the market, have contributed to our significant growth in the marketplace over the last 10 years, and have enabled us to assume a leadership position as an Advocate in Safeguarding the Lifestyles of Canadians, Simply,” concludes Paton.