approaching 65? review your insurance policy before benefits change or disappear
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according to statistics canada's 2023 labour report, about 900,000 people were working past the age of 65.
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are you approaching age 65 or thinking you may have to work past retirement age? if so, you should review your benefits policy beforehand, as some group insurance benefits may change or may even vanish when you reach age 65.
with many canadians increasingly staying in the workforce past age 65, reviewing their benefits package to see what is covered is very important. a majority of workplaces cut or reduce employee disability insurance once employees reach their 65th birthday, even if they’re still working. and it’s not just disability insurance; depending on your policy, sometimes even your health or dental benefits end at age 65.
so, if you intend to keep working past 65, it’s very important for you to know when your coverage changes or ends.
according to statistics canada’s 2023 labour report, about 900,000 people were working past the age of 65. this labour force survey found fewer people had retired in february 2023, compared to the year before, among people aged 55 to 64.
for those older canadians who are delaying retirement, reasons cited include labour market conditions and financial necessity born out of insufficient income levels, and/or lack of retirement savings and pension plans.
however, many people are surprised to learn that upon turning 65, they lose many of the benefits previously provided through their employer’s group insurance plan. for someone who needs to work because of the high cost of living, but who gets injured at work, they would not have access to disability benefits. it’s a terrible situation to be in if you’re unable to work and unable to pay your bills.
all employed people, even those who are self-employed, should review their benefits plans in case an injury or illness affects their ability to earn an income. when reviewing disability benefits, this is what you should consider:
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- group plans cater to all employees and typically most employers choose the least expensive plan;
- if your employer is currently paying for benefits, determine how much extra it would cost to add better benefits for yourself after age 65;
- review to ensure your policy has a cost-of-living increase to address inflation;
- ask about optional “rider coverage,” which can protect your future insurability by guaranteeing you the right to purchase additional amounts of disability insurance at specified dates in the future;
- check coverage details to determine the amount or portion of your income disability benefits will replace if you’re unable to work. it should be between 60 to 80 percent of your monthly salary. many policies may have monthly maximums, which put a limit on the amount you can receive;
- check if there are extensions offered after age 65 on your group policy, sometimes they are available for one year or two years
- individual policies can cater to your individual needs. it’s important to ask detailed questions about the policy to make sure you understand what benefit you will get, when you will get it, and under which circumstances.
it’s always recommended to be proactive. if you are receiving benefits through your employer, check not only if the benefits end at 65, but also what the cost would be to continue that coverage and confirm the terms and income limits. the same is true for private insurance policies. if you have private insurance, review the coverage, especially if you’re still working. some plans might provide limited benefits after 65.
disability insurance, whether provided through an employer’s group policy or personal insurance, is meant to provide a financial safety net that helps replace your income if an illness or injury prevents you from working.
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everyone of any age should – at one point – take some time to review their policy to make sure they understand when their coverage changes or ends and if that financial safety net will be there when they need it. no one likes unexpected surprises or costs, especially in their later work years.
nainesh kotak, is the founder of kotak personal injury law, a firm focusing on protecting their client’s rights to justice and obtaining the compensation their clients deserve. he also serves as the chair of the long-term disability section of the ontario trial lawyers’ association.
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