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Insights & advice

Disability vs. critical illness insurance: What’s the difference?

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There are many different types of insurance designed to protect one of your biggest assets: Yourself. There’s life insurance, health insurance, long-term care insurance—some celebrities even protect  parts of their body against the possibility of injury.

While you might not need to insure your teeth for $30 million like Julia Roberts and you probably don’t need $70 million leg insurance like David Beckham, there are types of insurance designed to help you if you can’t work due to illness or injury.  These are  disability insurance and critical illness insurance. 

While these two types of insurance have similarities because they can help you and your family with often-difficult personal experiences, they  have many important differences and provide solutions to  different financial protection needs.

Disability insurance is a monthly payment that replaces some of your income if you can’t work because of an injury or illness. It usually provides you with 60 to 70 per cent of your income so  you can maintain as much of your standard of living as possible until you can return to work.  

Critical illness insurance,  provides a one-time, lump-sum payment that you can use any way you want if you experience one of the serious conditions as defined by your protection, such as cancer, heart attack or stroke. Not everyone’s recovery costs are the same. In addition to the possibility of a leave of absence from your job, a critical illness can sometimes mean that you’re left with the  costs of recovery. This could include a need for costly assistive devices, or even travel expenses—things disability insurance may not cover.

Why should you get it?

Disability insurance

Critical illness insurance

Life happens:

Almost half of Canadians live paycheque to paycheque Footnote *. If you were unable to work due to injury or illness, disability insurance can help you keep your desired lifestyle by replacing some of your lost income. This is typically in the range of 60-70% of your salary.

Getting sick is expensive:

A critical illness can be expensive.  Lost income if you can't work, medication, treatment costs, etc., all add up. 42% of working Canadians couldn't last six months on their current level of savings if they became critically ill Footnote **. With critical illness insurance, you could have the money you need when you need it.

What would I use the money for?

Disability insurance


Critical illness insurance

Keeping up with your expenses:

The money you get is supposed to cover costs normally covered by your income. This could include your bills, mortgage or rent, groceries, child care, and other household expenses.

Any way you want:

  • Pay for small costs like hospital parking
  • Get a private hospital room
  • Cover higher-than-expected medication costs
  • Hire a housekeeper or yard maintenance company so you and your family can spend less time doing chores and more time together
  • Get away from it all - go on a trip with your family while you recover
How long does it take to pay out?

Disability insurance

Critical illness insurance

It varies:

Your monthly payments typically start after you've been off work with a covered disability for between 30-120 days, depending on your coverage.

Usually after 30 days:

When you survive most of the defined critical illnesses for more than 30 days, your coverage is paid out.

Who can apply?

Disability insurance

Critical illness insurance

Employed people:

Disability insurance covers you for an amount based on your salary.


Parents, grandparents, even children (through their parents or grandparents).

Disability insurance can help you keep up with your existing expenses, but for most, a critical illness comes with costs.

Many people diagnosed with a critical illness may still be able to work and are ineligible for benefits under their disability insurance coverage. On the other hand, if you break your leg and are unable to work, but all you have is critical illness insurance, you might struggle to make ends meet. 

To build a complete financial protection plan it’s important to consider both disability insurance and critical illness insurance.