Most Canadian workers would suffer severe financial hardship if they were forced out of work with a disability.
More than half of Canadians believe they would experience financial difficulty if their pay was delayed by even one week, according to a recent RBC Insurance survey.
Three-in-four (76 per cent) 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.
Despite the concern, only about a quarter (27 per cent) of Canadian workers have discussed how a disability would financially impact their family.
This number does not even increase substantially among workers who've indicated that they've taken time off in the past because of a disability (33 per cent).
"A long term disability can have serious consequences affecting one's financial situation, including leaving insufficient funds to cover regular living expenses and/or delaying or reducing retirement savings," says Mark Hardy, senior manager, Life and Living Benefits, RBC Insurance.
"Industry research shows that 26 per cent 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. These findings emphasize the need for Canadians to ensure that they have the appropriate level of coverage in case of a long term disability."
While few are talking about it, even fewer have coverage
Canadians are not taking the proper precautions to ensure they're financially protected in case of disability.
The RBC Insurance survey revealed that just 16 per cent of respondents have individual disability insurance outside of any workplace coverage.
Among Canadian workers who have not purchased an individual policy, one-in-10 don't know what disability coverage is, while a quarter (22 per cent) have not thought about their chances of becoming disabled.
Breaking the bank to relieve disability duress
If unable to work due to a disability, most Canadians would dip into their personal savings (34 per cent) to pay for essential living expenses; while others said they would rely on their spouse/partner's income (29 per cent), government support (19 per cent) and cash in investments (16 per cent).
Fifteen per cent of Canadian workers don't know how they would pay for their living expenses if they were faced with a disability.
"The average length of a disability over 90 days is between two to three years. 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' Most people will realize that they don't."
"Purchasing individual disability coverage provides you with the security of knowing you will have money coming in to replace your lost income."
Here are a few things Canadians should consider:
About the RBC Insurance Survey
RBC Insurance commissioned Ipsos to conduct a survey to gauge public opinion of Canadian workers regarding matters related to disability, disability in the workplace, and disability insurance coverage.
The survey was conducted between July 14 to July 18, 2014. In total, a sample of n=1,000 employed Canadians was surveyed online using Ipsos's I-Say online panel.
The precision of Ipsos's online survey are measured using a credibility interval, in this case the results are considered accurate to within Plus/Minus3.5 percentage points, 19 times out of 20, had the entire population of Canadian workers been polled.
About RBC Insurance
RBC Insurance®, through its operating entities, provides a wide range of travel, life, health, home, auto, wealth and reinsurance products and solutions, as well as creditor and business insurance services to individual, business and group clients.
RBC Insurance has more than four million clients globally. We are one of the largest Canadian bank-owned group of insurance companies, and among the fastest growing insurance organizations in the country.
RBC Insurance employs more than 3,000 employees, and is the brand name for the insurance operating entities of Royal Bank of Canada.