Who Will Pay Your Bills if You Can’t Work?

When I was 27, Patti, a friend in Newfoundland, was diagnosed with Multiple Schlerosis. She was 25, happily married, they owned their own home and she had a great job at Memorial University. Within six months, she was in a wheelchair and within one year she was bedridden. Her husband left her after one year – he just couldn’t come to grips with the fact that the vibrant, active young woman he married had changed this much. The only bright spot, at that time, was that she had excellent disability insurance with her job so she continued to have an income. That allowed her to stay in her own home.

Patti had many friends who helped her over the next 25 years. I helped her by taking her swimming once a week until I became pregnant with my first son five years later and I helped in other ways until we moved to British Columbia when my sons were 8 and 10. Patti had a positive attitude throughout her illness and she remarried after about a decade – to a man who looked after her to the end. Patti passed away several years ago and by that time, the only means of communication she had was the movement of one eyebrow.

So why am I telling you this? Well, her situation resonated with my group of friends who were all self-employed artists and craftsmen at that time. We realized that we needed protection if we couldn’t work. Four of us bought disability insurance. Two of us have never made a claim. One fell off the roof of the studio she was building, broke her wrist and was supported by her insurance for six months. Another was on claim for ten years for fibromyalgia. From these personal experiences, I KNOW that disability insurance makes a difference.

Let’s fast-forward to last year. Both of my sons, Alex, who was 19, and Nick, who was 21, were living and working in Whistler. Nick called me on February 28th to tell me that Alex was being taken to Vancouver General Hospital because he had hurt himself skiing. The next day I went over to the hospital and was told that he had destroyed the ligaments between the fifth and sixth vertebrae and would need surgery. Within three days he had four pins, two in each vertebrae, two rods connecting them and a bone graft from his hip. The good news is that on his 20th birthday on June 2nd he was told he was 100% and if he decided to ski off a 65 foot cliff again the odds of this particular accident had increased from one in 2 million to one in a million!

Alex had been working fitting boots in a ski store in Whistler. He did not work for the next four months. Employment Insurance did not pay him for two weeks – the waiting period, then did not pay him because of vacation pay. Finally, he was paid $400 a month and his rent was $500 a month. What was most galling is that the $400 was taxable, there was not enough tax taken out and he owes almost $300 in taxes now!

Nick has been self-employed every summer since High School so he does not have EI. Last year, he was eligible to buy personal disability insurance because he was no longer a student 8 months of the year. I suggested that he purchase ’injury only’ disability insurance with 24-hour coverage that would pay him from the first day after an injury. Nick recognized that this was a good idea and bought insurance. At 11pm on April 1st his right knee hit a rock and shattered his kneecap. He skiied out, drove to the clinic, was x-rayed and sent for surgery in Vancouver. Luckily, he did not require surgery, but he is in a cast for 6 weeks, and is not allowed to return to work for two more weeks. The good news: Nick will receive $1,200 untaxed per month until he returns to work.

Gill Campbell is a certified financial planner and an independent insurance broker. Please email me with specific areas that you would like me to consider in developing future columns.