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What's the difference between disability insurance and critical illness insurance?
Side by side
| Disability insurance | Critical illness insurance | |
|---|---|---|
| Pays when | You can't work because of illness or injury | You're diagnosed with a covered condition and survive a short waiting period |
| Pays how | Monthly, typically 60–70% of income | One lump sum, e.g. $100,000 |
| Pays for how long | Until you recover, or to the end of the benefit period (often age 65) | Once |
| Use the money for | Replacing your paycheque | Anything: treatment abroad, time off for your spouse, paying down the mortgage |
| Tax on the benefit | Tax-free if you paid the premium yourself | Tax-free |
Why disability insurance comes first for most people
Your ability to earn is your biggest asset. A 35-year-old earning $90,000 will earn roughly $2.7 million before 65. The odds of a disability lasting 90 days or more before retirement are higher than most people assume. If you're self-employed or incorporated, there is no group plan: it's this or nothing.
Why critical illness still matters
Many people with a serious diagnosis go back to work within months, so disability insurance pays little. But the costs land anyway: a spouse taking leave, travel for treatment, home changes, or simply time to recover without financial pressure. A lump sum covers exactly that. It's also the policy most often claimed by people who are otherwise "fine".
If you can only afford one
For most working people: disability insurance, sized to replace your income. Then add critical illness as budget allows, often starting with a modest amount like $50,000 to $100,000.
Through work or on your own?
Check the booklet first. Group long-term disability often has a taxable benefit and a cap. Group critical illness is often small or absent. Personal policies fill the gaps and come with you when you leave.
Want this worked out for your numbers? We'll build a plan for your family that covers the risks, the savings and the goals, and show you what to do first.