In a world where the unexpected can disrupt our lives at any moment, protecting your financial future becomes a priority. In Quebec, two essential solutions deserve your attention: disability insurance and overhead expense insurance. These often overlooked protections can make the difference between financial stability and major economic difficulties in times of hardship. This article explains in detail these two types of insurance, their benefits, their differences, and how they can fit into your financial protection strategy.
What is disability insurance?
Disability insurance is a financial protection designed to support you when life takes an unexpected turn. In the event of a serious illness or accident that prevents you from working, this insurance pays you replacement income to help you continue meeting your financial obligations. In other words, it helps you maintain your standard of living despite a temporary or permanent loss of income.
Many people mistakenly believe they are sufficiently covered by public programs such as the Quebec Pension Plan (QPP) or Employment Insurance. However, these programs offer limited and conditional protection, often insufficient to cover real daily expenses (housing, food, car, debts, etc.).
Why is it essential, even if you are healthy today?
No one is immune to the unexpected. In fact, according to statistics, 1 in 3 workers will face a disability lasting more than 90 days before the age of 65. This can range from cancer to depression, to a car accident or heart problem. And unlike life insurance, this is a protection YOU need during your lifetime, to safeguard your financial stability and that of your family.
Concrete example: a calculation that makes you think
Let’s take the case of an employee earning $60,000 per year. In case of disability, they might first be eligible for sickness employment insurance, which pays up to $695 gross per week, for a maximum of 26 weeks. After this period, if they are still unable to work, the Quebec Pension Plan (QPP) could take over with a disability benefit that can reach about $1,500 per month before taxes, or approximately $18,000 per year.
This represents barely 30% of their usual income, well below the minimum needed to cover fixed expenses of an average household: housing, food, car, debts, etc.
Without individual or group disability insurance, they risk having to dip into their savings, sell assets… or turn to social welfare, whose benefits are even more limited. In other words, a disability without adequate coverage can quickly become a financial disaster.
The different types of disability insurance
| Type of Insurance | Coverage | Duration | Advantages |
|---|---|---|---|
| Short-term | 3 to 6 months | Limited | Ideal for temporary disabilities |
| Long-term | Up to age 65 | Long-term | Full protection for severe cases |
| Professional | Specific to your profession | Variable | Covers risks unique to your occupation |
Why subscribe to disability insurance?
Subscribing to disability insurance is much more than a precaution: it’s a strategic decision to protect your financial future. Here’s why this protection is essential:
- Maintain your standard of living
In case of disability, your insurance benefits can replace between 60% and 85% of your net income, depending on the contract chosen. This allows you to continue meeting your financial commitments: rent or mortgage, food, utilities, school or daycare fees, etc. Without this replacement income, even the most basic expenses can become difficult to manage. - Protect your savings
Without disability insurance, a prolonged illness or accident could quickly force you to deplete your savings, sometimes those intended for retirement or important projects. A disability lasting from a few months to several years can jeopardize many years of savings efforts. By insuring yourself, you avoid tapping into your assets or resorting to debt to make ends meet. - Cover costs related to rehabilitation or returning to work
Some contracts include additional coverage for rehabilitation costs, medical treatments not covered, or support services for a gradual return to work. This can include, for example, physiotherapy, specialized equipment, or even training for a new position if you can no longer perform your original job.
Overhead expense insurance: comprehensive protection for your financial commitments
Definition and purpose
Overhead expense insurance—also known as universal loan insurance—is designed to cover your fixed financial obligations when you’re unable to work due to a disability, whether temporary or long-term.
For entrepreneurs, the premiums are 100% tax-deductible, making this a fiscally advantageous solution.
Unlike traditional disability insurance, which provides a personal replacement income, overhead expense insurance pays your creditors directly. It serves as a financial stabilizer by keeping your obligations current—such as your mortgage, car loan, credit cards, lines of credit, or commercial/personal rent.
In short, it complements disability insurance by allowing you to:
- Avoid using your disability income to pay your debts
- Maintain your credit rating
- Protect your wealth and personal assets
A typical case
Take Jean, a 40-year-old entrepreneur in Québec. His fixed monthly expenses are:
- Mortgage: $1,500
- Car payment: $400
- Credit cards: $300
If he becomes disabled, even temporarily, these payments don’t stop. With only disability insurance, Jean would have to dip into his replacement income to keep up. But with overhead expense insurance, the insurer covers these payments automatically—allowing Jean to use his disability income for living expenses, while keeping his finances afloat stress-free.
Comparing coverage options
| Criteria | Disability Insurance | Overhead Expense Insurance |
|---|---|---|
| Who receives the benefits | You | Your creditors |
| Amount paid | Percentage of income (e.g. 60–85%) | Fixed amount based on declared debts |
| Taxation | Often taxable (depending on plan/source) | Generally non-taxable |
| Flexibility of use | Unrestricted: housing, food, etc. | Targeted payments: mortgage, car loan, credit |
| Coverage duration | Until end of disability or age 65 | Usually limited (e.g. 12, 24, or 60 months) |
Quebec-specific advantages
Some insurers offer products tailored to Québec’s financial realities—like universal loan insurance. Here’s what makes them particularly attractive:
- Housing coverage
Whether you’re a homeowner or tenant, your policy can cover regular payments related to your primary residence or commercial space. - Evolving protection
Your coverage can automatically adjust as you take on new loans, without needing to sign a new contract. Ideal if you refinance your home or buy a new vehicle. - Customizable options
You can enhance your coverage with add-ons for business rent, management expenses, or investment-related debt.
Combining both: the winning strategy
Why double coverage works
Disability insurance and overhead expense insurance are not substitutes—they’re allies. Together, they create a robust financial shield, covering both your personal needs and fixed commitments.
- Disability insurance takes care of your day-to-day expenses: food, healthcare, transportation, leisure, etc.
- Overhead expense insurance handles your non-negotiable payments: mortgage, car loan, credit cards, rent, and more.
This combination brings greater stability, independence, and peace of mind, even in the face of major life disruptions.
A real-life example
Meet Marie, a 35-year-old legal professional in Montréal earning $70,000 a year.
- Her disability insurance provides approx. $3,400/month (about 70% of her net income)
- Her overhead expense insurance covers $2,000/month for her mortgage, car loan, and personal debts
Result: She still has $1,400/month left to cover her essential living costs—without compromising her lifestyle or credit.
Without this dual protection, relying solely on public benefits like the Québec Pension Plan (QPP) would leave her with only $1,500/month—barely enough to cover her debts, let alone live decently.
Choosing the right protection: smart questions to ask
Key selection criteria
Before making a decision, ask yourself:
- Your financial commitments
Do you have a mortgage, car loan, student debt, or credit cards? Make a full inventory. - Your current coverage
Are you part of a group insurance plan at work? Covered by QPP or an individual plan? - Your risk tolerance
If you lost your income, could you maintain your standard of living? For how long? - Your budget
How much are you willing to invest monthly for protection? Are the premiums reasonable compared to the risks?
Must-ask questions for your advisor
Before signing any policy, make sure you get clear answers to:
- What exclusions are outlined in the contract?
- How is “disability” defined? (total, partial, current occupation, any occupation)
- What is the waiting period before benefits begin?
- Are the benefit amounts indexed to inflation?
- Can I modify or upgrade my coverage later on?
A good advisor will take the time to explain all of these elements with full transparency.
A smart decision for long-term peace of mind
In Québec, where harsh winters, unexpected health issues, and economic realities are part of everyday life, it’s essential not to leave your financial future to chance.
By combining disability insurance with overhead expense coverage, you’re investing in resilience, stability, and peace of mind—not just for yourself, but for your loved ones too.
Don’t wait for an accident or illness to turn your life upside down. Plan today to protect your tomorrow.
Need Guidance? Turn to Mathieu Routhier
With a human, strategic, and personalized approach, Mathieu Routhier, Financial Security Advisor, helps you build a custom protection plan. A recognized expert in disability insurance and universal loan coverage, he guides you at every step to ensure your decisions are solid, lasting, and aligned with your life goals.
Book an appointment today for a full review of your situation. One hour of your time now could make all the difference later.
“True financial security doesn’t mean hoping nothing will happen—it means being ready when it does.”
