Terminated – The Loss of Disability Coverage

It is prudent  for an employee to obtain individual critical illness insurance and/or individual disability insurance. The reason for this is that if  the employee’s  employment is terminated, their  insurance coverage for disability benefits  (assuming they have coverage through their  employment) will end at the end of the statutory notice period which is  at most 8 weeks depending upon whether the  employer is provincially or federally regulated.

The insurance company’s policy will typically only provide  coverage  ‎for disability benefits for the  statutory notice period.  Therefore, even if the employer wanted to extend coverage for disability benefits throughout the common law notice period, the employer is usually unable to do so.

When a settlement is reached, the employee will be required to sign a Full and Final Release which includes a release of  all claims for disability benefits. If the employee obtains  their  own individual insurance for critical illness and/or disability, they will  have ensured that they  have  income replacement protection in the event they become disabled after termination. The employee  should get this coverage(s) in place when they  are young because as a person  ages, there is a greater likelihood that they  will have suffered illnesses and/or injuries that may affect their  eligibility for these two types of coverages.