Comments on: Risk Management via Insurance – A Definitive Guide

By: Tim Landry

Tim Landry — Thu, 21 Aug 2008 19:43:26 +0000

Comment to Shayne’s point. I WISH it were “If the employer pays half, half the benefit is taxable”. What happens in fact is that ALL of the benefit is taxable but you get to deduct from the amount all the premiums YOU have paid – which is not the same thing. To create a simplified example. You have $2,000 monthly of taxable income and YOUR portion of the monthly premium is $100. You become disabled after one year of paying pemiums – so YOUR total contribution is $1,200. The first month you get a check for $2,000 – you can deduct $1,200 from it – so THAT month your taxable benefit is $800. Every other month – for the balance of the claim – the full $2,000 is taxable.

Now – another major reason not to rely on group benefits. My dad went to work for Bell Canada in 1936 and except for the Canadian Navy during WW II – he had no other employer. That is no longer true. Statistics Canada says we have 3 CAREERS and 8 jobs over a working lifetime now. In addition – we have one objective – to be competitive in a changing world market – and one problem – one of the most expensive labour systems in the world. Why do you think so many “employers” are hiring under contract – with no benefits? Because it saves them – I am told – 30% and makes them that much more competitive. How would you like to be offered a job – with a 30% raise in pay? I suspect most would love to take it. What happens if the new job comes with no benefits (the “price” of the raise)? Oh well, I can always buy them. What happens if I am a diabetic – or overweight – or have been treated for stress – or any other problem? Suddenly the choice is not so easy!

By: Brian Poncelet, CFP

Brian Poncelet, CFP — Fri, 04 Jul 2008 19:19:23 +0000

Hi Mike,

Having your own disability policy is usually better than any group plan people may have. Yes the money from a privately own disability plan is tax free, plus if it is a good plan you could do something else and still get paid. Example a dentist hurts himself, decides to sell cars he can still collect his disability.

With a group plan, if you can do any job they will reduce or cut off any disabilty cheque. Plus you will have to check with a doctor every few months to see if they can cut you off.

Many plans only offer coverage for five years (group plans) If it is serious then financially you will be ruined if it lasts more than five years.

hope this helps a bit.

regards,

Brian

By: Shayne S

Shayne S — Thu, 26 Jun 2008 15:38:20 +0000

I believe that your disability insurance income will be taxable if your premiums for the insurance were not taxes. ie: Some employers pay half of your disability premium and do not tax this benefit. In this case half of your disability insurance income would be taxable.

By: MikeG

MikeG — Thu, 26 Jun 2008 15:17:29 +0000

I read somewhere that you should have your own disability insurance, rather than through your employer.. They said this was because if its from the employer and you make a claim, its taxable. And if its your own and you make a claim its tax free… Is this true?

-MikeG

By: TKO from Ontario

TKO from Ontario — Thu, 26 Jun 2008 15:02:36 +0000

As a new father, more so than ever I look forward to information on Term Life and Disability Insurance. Gotta make sure my girls are taken care of.