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The statistics are compelling. It is highly probable that some time in your life you will become disabled and unable to work. Here are some of the stats:

• The odds of becoming disabled for at least 90 days before age 65 (for 30-50 year old men) are the same as the chance of dying
• One in four Canadians will be disabled at some point during their lifetime
• The odds of becoming disabled for 3 months or longer are 50% at age 35 and 40% at age 45
• Disability is a leading cause of mortgage foreclosure
• 30% of Canadians don't have appropriate disability insurance
• 14.3% of Canadian households have someone with a disability

A new survey by RBC Insurance and Ipsos-Reid says Canadians believe they would need to postpone retirement or use their savings if they had a serious injury or illness. Whether your disability is short-term or long-term, disability insurance can protect you and your family from financial ruin if you are suddenly unable to earn an income.

But buying disability insurance can be very complicated. There are various kinds of disability insurance. Many people have insurance through their workplace benefits plan. But if you lose your job that disability insurance is also gone. Disability insurance usually replaces a certainly percentage of your monthly income, for example 60%. Payments are tax-free if you pay for it and taxable income if your employer pays the premiums.

If you are buying individual disability insurance, the costs can vary widely depending on your personal situation. For example, if you work in a more physical job, your premium may be higher. Your cost could vary depending on whether your coverage lasts a certain number of years or to a certain age.

One of the most important terms you need to understand is what occupation or job you are covered for. Some policies cover you only for your occupation (the job you had at the time of the disability). Other policies may cover you for any occupation. Often policies will cover you for the first two to five years for your job. After that, you will only quality for continuing payments if you can't work at all.

For small business owners and self-employed Canadians, you can also buy disability insurance to cover your monthly expenses or your revenues (instead of income). Expense coverage is based on the amount needed to cover business expenses, as backed up by invoices and contracts. Revenue coverage is based on proven business revenues for a certain period of time leading up to the disability.

Whether you are employed or self-employed, everyone should talk to their financial advisor about disability insurance to ensure suitable protection.

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