What If There Was No Government Relief Right Now?

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Here in Canada, I’d say that the government acted quickly to ensure that Canadians who lost their jobs, were laid off, or who couldn’t work because of COVID-19, were still able to receive the income they needed to pay their bills.

The Canadian Emergency Response Benefit (CERB) provides eligible Canadians with essentially $500/week. Although it is a taxable benefit, it covers a wide range of situations so a lot of people are eligible to receive it. Even the self-employed, contract workers, and students can qualify if they can’t find their regular summer employment.

Unfortunately, people today aren’t great at saving money or budgeting. In Canada, about 53% of Canadians live paycheck to paycheck and half of Canadians have no emergency savings. So without CERB, a lot of people would be in big trouble to just make ends meet. Thankfully the government created the CERB to help Canadians in a challenging time like this. But they didn’t necessarily have to and the government can’t always be there when we need them.

COVID-19 vs. Disability

A global pandemic like COVID-19 is rare and that’s a really good thing. A global pandemic that shuts down world economies and forces people not to be able to earn a living would not be an ideal reoccurring event. But something that isn’t rare is people being forced to take time off work because of an accident or illness. Statistically, people are much more likely to be faced with being on disability leave for a period of time than being off work due to a global pandemic.

A healthy 25 year old Canadian has about a 58% chance of facing a disability that lasts longer than 90 days prior to their retirement. And statistically, when a disability lasts longer than 90 days, it usually lasts anywhere from 2 to 3 years. Compared to a once in a multiple-generations pandemic, as concerning as COVID-19 has been, regular, everyday disability concerns are much more relevant for the majority of people.

In Winnipeg, we have been under COVID-19 protocol for just over 3 months, but it honestly feels like a lot longer than that. So imagine instead of COVID-19 being the reason you couldn’t work, you weren’t able to work because of an accident or illness, and because it’s already been 3 months, statically we have at least another 21 months to go. That would be brutal. Not just the income-producing side of things, but also mentally.

We live in a world where a lot of people generally think ‘it won’t happen to me’, or ‘that stuff doesn’t happen here’. What we’ve seen with COVID-19 is anything can happen anywhere to anyone at any time. People are often extremely underinsured. With living benefits, like disability insurance, if something happens to you, it affects you and the people closest to you the most.

Disability Realities

Most people get disability insurance standard through their employers’ benefits packages. Self-employed individuals are on their own to fund their own benefits. Even for the people who do have disability insurance through their employer, I would bet most have no idea what their benefits actually are.

Disability insurance provides a tax-free benefit, usually around 66% of your take-home pay, which is about what you’d bring home after you pay taxes on your regular income. It’s meant to be a very close swap, but not all income is necessarily covered under disability insurance.

If you work a lot of overtime and rely on that income to pay your bills and support your lifestyle, that might be an issue. Disability is usually based on a 40-hour workweek. The extra income from overtime won’t be covered, meaning the drop from regular income to disability income will be a bigger gap. It’s the same for people who rely on tips or commissions. If you rely on income that wouldn’t be covered under a regular disability insurance plan, you’ll have a greater need for establishing an emergency fund. You’ll need a way to supplement that income.

Proactive Rather Than Reactive

Without government benefits right now, life would be so much tougher. People have to earn money, but unfortunately, some people who want to work can’t. Whether it’s a global pandemic or an accident or illness that causes you not to be able to work, having the security of insurance is a must.

My advice is if COVID-19 has put you in the slightest bit of uncomfortableness financially, it’s a good ‘sign’ to look into your own benefits and ensure you have the coverage you need.

It doesn’t have to be anything significant to put someone in the position of not being able to work. Here in Winnipeg lots of things come to mind, especially in winter. It could be as simple as slipping on ice, being in a car accident, or injuring yourself while doing something you regularly do. Accidents happen all of the time; we can’t completely control it. It’s unbelievably important that we put ourselves in the best situation possible to limit its consequences.

Insurance is often not something we think about until we need it, and if you need insurance and don’t already have it, your options are going to pretty much be zero. Your biggest asset is your ability to earn an income and without it, getting through an enjoyable life and fulfilling life seems impossible.

Take a few minutes, look into your insurance coverage, and just make sure if anything happens, you and your family are going to be okay.

Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.

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