Can You Have Employer and Private Disability Insurance Together?

Many people rely solely on the disability insurance offered through their employer. But what if that coverage is limited, taxable, or tied to a job you might leave? Adding a private disability insurance policy can provide more control and stability. The good news is that in Canada, you can hold both employer-sponsored and private coverage — and in many cases, it is a smart strategy.

How Dual Coverage Works

Having both types of policies means that you may receive benefits from more than one source if you are unable to work due to illness or injury. However, there are limits. Insurers coordinate benefits to ensure your total income replacement does not exceed a certain percentage of your earnings, usually around 85 percent.

Coverage Type	Features
Employer-sponsored policy	Often part of group benefits, may be taxable, limited customization
Private individual policy	Purchased personally, usually tax-free, flexible definitions and benefits
Combined strategy	Can supplement gaps in employer coverage or maintain benefits between jobs

Your private insurer will typically consider any group benefits when calculating your eligible monthly benefit. This prevents over-insurance but still allows you to top up your protection.

Note: Private insurers will often reduce your maximum benefit if you already have a group plan, but they still allow you to add coverage up to a combined threshold. This ensures you are not over-insured, but still adequately protected.

Why Combine Both Policies?

To increase coverage
Group plans may cap benefits at a flat dollar amount or only replace 50 to 60 percent of your salary. A private policy helps bridge the gap.
To maintain coverage between jobs
If you leave or lose your job, your group policy typically ends. A private policy stays with you, regardless of employment status.
To improve benefit quality
Personal policies often offer better definitions of disability, longer benefit periods, and inflation protection.
To make benefits tax-free
Most employer-paid plans result in taxable benefits. A personal plan paid with after-tax dollars can give you a tax-free top-up.

Tip: If your employer offers only short-term disability, adding a private long-term policy can protect your income beyond the initial recovery period.

Know How Coordination Works

While combining policies is legal and often wise, insurers coordinate benefits to prevent you from receiving more than your actual income. This means:

You must disclose existing coverage when applying for new insurance
Your total monthly benefit will be capped based on your earnings
Private policies will be adjusted to reflect any employer benefits you receive

Build a More Resilient Safety Net