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MoneySense

Understanding disability income insurance

If you couldn’t work tomorrow, how long could you last financially? Disability income insurance replaces lost earnings—understand payout conditions, waiting periods, and benefit limits.

Last updated 2 July 2026
A person in a white blouse holds a piece of paper in one hand and a white mug in the other.

Key takeaways

  • Policy pays a monthly benefit but it may not completely cover your entire income

  • Payouts can be for up to 5 or 10 years, or until you are 60 or 65

  • Benefits are payable only if you're continuously disabled after the deferred period

Disability income insurance pays you for the loss of income due to an accident or illness. The policy helps to ease your financial loss, but will not completely replace your income before the accident or illness.

Key features

  • Pays a fixed amount each month to replace the income you lose if you are unable to work due to an illness or accident. Pays up to 80% of your average monthly salary

  • Payment of benefits usually starts if you are disabled after the deferred period

  • The monthly income may be paid for up to 5 or 10 years, or until you are 60 or 65

  • Payment will stop or reduce once you can start work again

  • Reduction in benefits may be in proportion to your recovery

  • Clarify with your insurer how "disability" is defined in the policy as it may vary from insurer to insurer

  • Premium payable depends on many things, including the definition of disability used. Check with your insurer for the definitions used in your policy

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