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CPP disability benefits likely aren’t enough

- 10/14/2020
CPP disability benefits likely aren’t enough

What CPP and other government benefits pay for, and why it’s likely not enough

Government plans, such as Canada Pension Plan (CPP), provide financial coverage for a number of life scenarios like retirement or an unexpected disability. Combined with other common government benefits like worker’s compensation and Employment Insurance (EI), Canadians often have a false sense of security about their ability to meet financial obligations if unable to work for an extended period of time. On the contrary, each plan is designed for a unique set of circumstances which often have strict qualification criteria, and rarely equates to one’s pre-disability income.

CPP benefits and other sponsored insurance offerings typically only cover a fraction of the expenses you would incur if you were to become disabled and unable to work. Furthermore, these plans have strict eligibility requirements and definitions that can make it difficult to qualify for the benefits you need.

The reality is that government benefits likely aren’t enough to maintain your standard of living and provide the financial security you need if an illness or accident leaves you unable to work.

Government Coverage Options

There are three main types of government-sponsored financial protection that likely come to mind for most Canadians. Each plan serves an important purpose for a subset of the Canadian population, but none are intended for short-term, non-work-related disabilities or the growing self-employed market. The fact remains, government-sponsored income replacement plans are not comprehensive enough to provide the full coverage you would need if you were to become disabled.

Let’s take a closer look at what these plans cover — and what they don’t — to understand where personal insurance can fill the gaps.

CPP Benefits

CPP benefits are well known for providing a monthly retirement pension to Canadians 60 years or older who have made enough contributions into the CPP over their career. But that’s not all CPP benefits provide. The Government of Canada also offers two types of CPP disability benefits for Canadians who have a disability that regularly prevents them from performing substantially gainful work or who have a long-term or terminal disability.

However, there are strict rules for what counts as a disability and who can access these benefits. The government stipulates that to qualify for this benefit, the disability must be both “severe” and “prolonged” as well as prevent you from being able to work any job. Medical adjudicators determine if your disability meets these criteria and how benefits will be dispensed — and it can take up to 120 days to know if your claim is accepted or rejected.

When you need benefits quickly, waiting this long to possibly receive financial assistance is not feasible and can quickly drain your savings. And for those who do qualify for CPP benefits, the six-month waiting period can cause significant financial hardship before benefits even begin, and the monthly benefit is rarely enough to cover all medical and living expenses.


The Workers’ Compensation Board (or Workplace Safety and Insurance Board in Ontario) protects injured workers by providing them with income replacement and compensation for rehabilitative care, assuming the worker has purchased workplace compensation benefits or is employed by a company with coverage mandated by the government.

Workplace compensation has several caveats. First of all, an accident must occur at work to be covered. The 2019 Report of Work Fatality and Injury Rates in Canada found the five-year average injury rate to be anywhere from 2-3 per 100 employees. As you can see, very few accidents are work-related and would be covered by WCB/WSIB. Even if an injury is covered by this insurance, disability benefits are capped at 85-90% of your net income (depending on the province and amount of coverage purchased, subject to the maximum amount allowed under the Worker’s Compensation Act).

As much as 50% of workplace compensation benefits are denied, and rates increase based on usage. Claiming on workplace compensation benefits is often a tedious process, requiring lengthy forms and frequent assessments from WCB/WSIB doctors — not your own doctor. At the end of the day, many Canadians have a false sense of security that the government will protect them if they become injured, but are unfortunately much more vulnerable than they realize.

Many Canadians have a false sense of security that the government will protect them if they become injured

Employment Insurance

Finally, there is EI. This program provides temporary income support to unemployed workers who have lost their job at no fault of their own. While EI can be claimed for some medical situations such as maternity and parental leave, it is a short-term solution — usually capped at 16 weeks — and is not intended as a substitute for disability income. Like CPP benefits, workers can only receive EI if they have paid premiums in the past year, have worked at least 600 hours in the last 52 weeks (or since a prior claim) and meet other strict qualifying conditions. This can make it difficult for seasonal workers or for those who may not have a steady job to qualify. Furthermore, EI benefits are capped at 55% of T4 income and only last for up to 112 days.

Contact The EDGE today toget a quote for disability insurance.

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Supplementing your financial plan with personal benefits

At The Edge Benefits, we believe that every Canadian needs a comprehensive benefit plan that works for their circumstances and lifestyle needs, without the added stress and uncertainty about whether those benefits will even be available when emergency strikes. That’s why we offer Income Replacement Benefits (also known as Disability Insurance or Loss of Income coverage), that provide you with a reliable, tax-free income when you can’t work due to an injury or illness.

EDGE Income Replacement Benefits provide up to $6,000 monthly income replacement (subject to occupational class limitations), protect against injuries only, or injuries and illnesses, provide the option of 24-hour coverage or non-occupational coverage and you choose when your benefits would start — immediately, after 30-days of disability or after 112 days to pick up after government benefits subside.

All of our income replacements plans are flexible and include guaranteed-issue injury coverage and a simplified, streamlined process for illness-related protection so you have peace of mind knowing that you will receive the financial support you need, when you need it most.

Receive a free quote for disability coverage today from The Edge Benefits.



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