What is the Extreme Disability Benefit Rider?

You likely already know the importance of life insurance: it is extremely beneficial for your family when you pass away. But what about those tough financial times that can arise when you are still alive? If you were unable to work due to severe disability, would your family still survive financially despite your loss of income? 

An Extreme Disability Benefit rider is an additional benefit that you can add to your life insurance policy. It provides a financial payment if you’re in a state of “extreme” physical disability. Insurers might define “extreme disability” differently, but it commonly includes the inability to bathe, eat, or dress on your own — among other challenges.

At PolicyAdvisor, we have significant experience helping Canadians understand whether they need an extreme disability benefit rider as part of their life insurance coverage. We can also find alternatives that could better fill the gaps in one’s needs.

What is a life insurance rider? 

A life insurance rider is an optional feature added to your policy to better address your unique insurance needs. Insurance riders typically require an additional premium payment, which is added to your monthly premium. Some riders may also be included at no extra cost.

 Learn more about life insurance riders.

How does the extreme disability benefit rider work? 

The extreme disability benefit rider is a form of accidental death benefit. It provides an advance payment of your life insurance payout in the event of an extreme physical disability. For instance, it could be either 50% or 25% of your death benefit, up to a maximum of $250,000. The payment is made after a pre-determined waiting period that varies by insurance provider.

The extreme disability benefit rider provides you with extra funds in your time of need. Your ailment might mean you can no longer earn income to support your family. Additionally, your household might need to enlist Disability Support Services or hire extra help, depending on the nature of disability. They may even need to adjust your living environment, such as by purchasing accessible vehicles or installing stairlifts due to your health status. 

This rider isn’t to be confused with disability insurance or critical illness insurance, although all of these typesof coverage can help in the event of loss of income due to illness or injury. The extreme disability benefit rider provides partial benefits in the form of a lump-sum advance on your life insurance payout.

How extreme disability is defined

Statistics Canada has estimated that around 22% of the population has some form of partial or permanent disability. But the definition of extreme disability varies among service providers. Some use “Severe Loss of Independent Existence” to measure extreme disability. Severe loss of independent existence occurs when you’re diagnosed with a total inability to perform four out of six daily living activities without assistance. 

These daily activities include:

• Bathing: Washing yourself 
• Dressing: Putting on or removing clothing, braces, artificial limbs, and other surgical appliances 
• Toileting: Getting on and off the toilet and performing personal hygiene tasks
• Bladder and Bowel Continence: Managing bladder and bowel function with or without a protective undergarment or other appliance to maintain hygiene
• Transferring: Moving to and from a bed, chair, or wheelchair
• Feeding: Eating or drinking 

After you receive a diagnosis of extreme disability from a specialist, your insurance company may have a waiting period of 90 to 180 days before providing the advanced payout.

Who offers an extreme disability benefit rider? 

Beneva (formerly SSQ Insurance) and UV Insurance provide two of the most popular extreme disability benefit riders with their life insurance policies. 

Beneva Insurance

Beneva offers flexible life insurance coverage that reaches a maximum benefit of $10,000,000. They provide terms of 10, 15, 20, 25, 30, 35, and 40 years. Their life insurance policies generally include the extreme disability benefit for free. 

Beneva’s extreme disability benefit provides the perks mentioned earlier in this article. Before the age of 60, 50% or 25% of the initial insurance amount may be payable in advance, up to $250,000, if you face a state of extreme disability for at least six months. 

Read our full review of Beneva Insurance’s term life insurance. 

UV Insurance

UV Insurance provides a form of the extreme disability benefit rider as an integral part of their T-20 Superior+ policy and other products. This rider provides 50% of the insurable amount, up to $100,000, if you face a severe loss of independent existence before your 60th birthday. The benefit is paid after 90 consecutive days of severe loss of independent existence.

Read our full review of UV Insurance’s term life insurance. 

Extreme disability rider vs catastrophic disability rider 

A catastrophic disability rider usually comes as part of or as an optional add-on to disability insurance policies. Catastrophic benefits give extra coverage in addition to your disability policy’s monthly benefits payout. This rider is primarily an income replacement option. It allows your disability insurance benefit to replace 100% of your prior income instead of only partial benefits.

Is it possible to add a rider to an existing life insurance policy?

There’s no straightforward answer here. Whether you can add a rider to an existing life insurance or disability policy depends on your insurer and your policy’s terms and conditions. It could further vary between riders. 

Adding a rider to an existing application often requires submitting a new application. You may have to take a medical exam or submit an Attending Physician’s Statement (APS) to qualify. 

Dropping a rider from your policy is much easier than adding one. Your insurer generally won’t need additional information, so it’s commonly a matter of filling out an application or informing your insurer of your wishes. After you drop the rider, your insurer adjusts your premiums accordingly. 

If you’re interested in a life insurance policy with an extreme disability benefit or another rider, our expert advisors can help. We can assess what life or disability insurance policies are right for you. Schedule a call with one of PolicyAdvisor’s insurance experts today and learn more about our competitive rates and coverage options.