Disability insurance provides a portion of your income if you become disabled and unable to work. When you’re unable to work because of an illness or injury, your income stops – but your expenses don’t. Disability insurance can help you cover your financial obligations in the short- and long-term so that you can focus on managing your health and condition.
Last updated: June 25, 2025 | Reviewed by Liane Goulet
What is disability insurance?
Disability insurance (DI) helps protect you financially by replacing a portion of your income. You receive a benefit if you’re ever diagnosed with a covered medical illness, mental health issue, or injury that prevents you from working.
Disability insurance is a type of health insurance. Other types of health insurance include personal health insurance, critical illness insurance, and long-term care insurance. What makes disability insurance different from other health insurances is that it is insurance for your income and is linked to your ability to work. It can help you meet your financial obligations during your recovery until you can return to work.
Benefits of disability insurance
Here are the key benefits of disability insurance:
Disability insurance helps cover living expenses and maintain your lifestyle while you’re unable to work.
Disability insurance can help fill gaps left by employer-provided or government disability programs.
Disability insurance prevents you from depleting retirement or emergency funds while you’re recovering and unable to work.
Disability insurance may help provide your dependents with financial protection if you're unable to work.
Types of disability insurance
There are different types of disability insurance (e.g. long-term and short-term disability plans) and every policy has a different way of classifying a disability. Some plans define disability as the inability to perform essential responsibilities of your job, even if you could work in another field. Other plans, however, define disability as the inability to perform the responsibilities of any job, including your current one. Connect with an advisor for more detailed information and to build an insurance plan that meets your specific needs.
What conditions are covered with disability insurance?
Disability insurance typically covers a range of conditions that prevent an individual from working and earning income. Some of the common conditions covered by disability insurance include:
- Physical injuries such as those from accidents, falls, or sports-related incidents.
- Chronic illnesses like cancer, heart disease, or diabetes.
- Mental health conditions including depression, anxiety, and post-traumatic stress.
- Musculoskeletal conditions such as back problems, arthritis, or carpal tunnel syndrome.
- Neurological conditions like multiple sclerosis, Parkinson's disease, or stroke.
- Respiratory diseases such as asthma or chronic obstructive pulmonary disease (COPD).
- Autoimmune disorders like lupus or rheumatoid arthritis.
- Vision or hearing loss when severe enough to impact work ability.
It's important to note that coverage can vary depending on your plan. Some policies may have exclusions for pre-existing conditions or certain types of injuries.
Frequently Asked Questions
In insurance, a disability can refer to a physical or mental condition that limits an individual’s ability to carry out important life functions or activities, like being able to work.
Canadian disability insurance plans can cover conditions that extend beyond visible or physical disabilities. Many policies offer coverage for ‘hidden’ or invisible disabilities including mental health conditions, autoimmune diseases, chronic pain and fatigue disorders, or neurological disorders.
Disability insurance may be worth it in Canada depending on your situation. Many Canadians assume that our healthcare plans and tax credits, such as the disability tax credit, are enough to protect against income loss.
Keep in mind that government plans may come with certain limitations and may not offer enough protection.
Speak to a Sun Life advisor to find out if disability insurance is right for you.
Qualification and pricing for disability insurance depends on your profession, income, medical history, and the type of coverage you need. Connect with an advisor for more detailed information and to find out if you’re eligible for disability insurance.
There is no difference between the two. Disability insurance is also sometimes called disability income insurance.
Qualification and pricing for disability insurance depends on your profession, income, medical history, and the type of coverage you need. Connect with an advisor for more detailed information and to find out if you’re eligible for disability insurance.
The duration of disability insurance coverage can vary depending on the type of policy and specific terms. Connect with an advisor for more detailed information.
Learn more
How to plan for the financial risk of a disability
See how a potential disabiliity could impact you and what you can do now to protect against it
This information is meant for educational and illustrative purposes only. Some conditions, exclusions and restrictions apply.