Coverage Types, Price Factors and 2026 Rules
How term, permanent, disability and critical illness insurance work, what drives the price, and what EI and CPP or QPP pay in 2026.
life insurance and disability insurance Canada
Life insurance and disability income protection in Canada, in plain numbers
If your paycheque stopped tomorrow because of illness, injury or death, who would cover the mortgage and the groceries? These guides show what EI, CPP or QPP and your group plan would actually pay, where the gap is, and how term life, disability and critical illness policies fill it.
- Calculate your life insurance need and your disability income gap with worked examples
- Understand EI sickness (up to 26 weeks), CPP and QPP disability, and how group LTD is taxed
- Get claims, beneficiary designations and Quebec rules right, and know where to complain
Explore by topic
Worked Calculations and Buying Checklists
Arithmetic for how much life insurance you need, the size of your disability income gap, LTD taxation and term length, plus checklists.
Claim Disputes, Mistakes and Official Sources
Common mistakes, denied claims, beneficiary designations including Quebec rules, reconsiderations and appeals, and where to verify the rules.
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Coverage Types, Price Factors and 2026 Rules
EI sickness benefits in 2026: 26 weeks, 55% up to $729 a week, and how to qualify
EI sickness benefits explained for 2026: who qualifies, the 600-hour rule, the one-week waiting period, the $729 weekly maximum, medical certificates and employer plans.
Worked Calculations and Buying Checklists
How much life insurance do I need in Canada? A worked needs calculation
Calculate how much life insurance you need in Canada: debts, income replacement in present value, education and final costs, minus group life, savings and CPP benefits.
Coverage Types, Price Factors and 2026 Rules
Life and disability insurance in Canada: how the layers of income protection fit together
How EI sickness, CPP/QPP disability, group LTD, term and permanent life, disability and critical illness insurance fit together in Canada, with 2026 figures.
Claim Disputes, Mistakes and Official Sources
12 costly life and disability insurance mistakes Canadians make (and how to avoid them)
The mistakes that cost Canadians their life or disability claims: incomplete applications, outdated beneficiaries, relying on group plans, missed deadlines and lapsed policies.
Coverage Types, Price Factors and 2026 Rules
Term vs permanent life insurance in Canada: which one fits your need
Term 10, 20, 30, term to 100, whole life and universal life compared: how each works in Canada, what it costs relative to term, and a decision checklist.
Tools
Disability Income Gap Calculator
See how much monthly income a disability benefit would replace and how big the remaining gap would be.
Disability Insurance Quote Comparison
Compare up to three individual disability quotes by yearly premium, waiting period and benefit against one disability scenario.
Term vs Permanent: Invest-the-Difference Projection
Project what the premium difference between a permanent and a term policy could grow to if you invested it instead.
Life and Disability Insurance Application Checklist
What to gather, check and decide before you apply for life, disability or critical illness insurance, and after the policy arrives.
Income protection options in Canada compared
| Option | What triggers payment | How much and how long | Watch out for |
|---|---|---|---|
| EI sickness benefits | Unable to work for medical reasons, with 600 insurable hours in the qualifying period | 55% of average insurable weekly earnings, up to $729 a week in 2026, for up to 26 weeks after a one-week waiting period | Taxable; medical certificate required; self-employed only if registered in advance |
| CPP disability benefit (QPP disability pension in Quebec) | Severe and prolonged disability preventing regular work at any job; recent contributions required | Up to $1,741.20 a month in 2026 (CPP), usually until 65 when it converts to a retirement pension | Strict definition; long processing; taxable; group LTD usually offsets it |
| Employer short-term disability (STD) | Unable to do your own job, per plan rules | Often a percentage of salary for 15 to 26 weeks | Not all employers offer it; taxable if employer-paid |
| Group long-term disability (LTD) | Disabled after an elimination period, often own occupation for 2 years then any occupation | Commonly 60% to 70% of gross salary up to a cap, to age 65 | Ends when you leave the job; offsets for CPP/QPP; taxable if employer-paid |
Frequently asked questions
How long do EI sickness benefits last in 2026?
Up to 26 weeks. The maximum rose from 15 to 26 weeks for claims starting on or after December 18, 2022. The benefit is 55% of your average insurable weekly earnings, up to $729 a week in 2026, after a one-week waiting period. See the EI sickness guide.
Are life insurance payouts taxable in Canada?
No. A death benefit paid to a named beneficiary is generally received tax-free. Investment growth inside a permanent policy can become taxable if you surrender the policy or withdraw cash above its adjusted cost basis. If the estate is the beneficiary, the money also passes through the estate and, outside Quebec, can be exposed to probate fees and creditors.
Are long-term disability benefits taxable?
It depends on who paid the premiums. If you paid all the premiums with after-tax money, the benefits are tax-free. If your employer paid any part, the benefits are taxable, less the premiums you contributed. The group LTD tax guide shows the calculation.
How much life insurance do I need?
Enough to pay off the debts your family could not carry, replace the income they rely on for the years they need it, and fund big future costs such as education, minus what you already have. Many working parents arrive at several times their gross income, but the number comes from the arithmetic, not a rule of thumb. Use the needs guide.
Is term or permanent life insurance better?
Term usually fits a need that ends: a mortgage, children growing up, income until retirement. Permanent fits a need that lasts for life, such as estate taxes or a dependant with a lifelong disability. The comparison is in term vs permanent.
Can I change my beneficiary in Quebec?
Usually yes, unless the designation is irrevocable. In Quebec, naming your married or civil union spouse makes the designation irrevocable unless you stated that it is revocable, so you would need their consent to change it. See beneficiary designations.
Where can I complain about a life or disability insurer?
First use the insurer's internal complaint process and ask for its final position in writing. Then you can go to the OmbudService for Life and Health Insurance (OLHI, olhi-oap.ca), which is free. In Quebec, you can also go to the Autorité des marchés financiers.
What happens if my insurance company fails?
Life and health insurers authorized in Canada must be members of Assuris, which protects policyholders up to set limits by type of benefit if a member insurer fails. Check current protection levels at assuris.ca.
How this site is made
Paycheque Backstop is an independent information project. Guides are drafted with the help of AI writing tools and checked against official and primary sources before publication; see our Editorial Policy. We are not affiliated with any provider mentioned on the site and do not sell products or services.