Disability Insurance for Self-Employed Canadians
This page is under the Canadian insurance planning guide. Definitions, elimination periods, and the employee version of the same contract are the disability insurance guide. A lump sum on a diagnosis is critical illness, and it does not pay the rent every month. The tax file for the business is the self-employed tax guide.
- As of September 2026, EI sickness is up to 26 weeks and the 2026 maximum is $729 a week. A full 26 weeks at that maximum is $18,954. Many people qualify for less, or for fewer weeks.
- CPP disability's 2026 maximum is $1,741.20 a month, which is $20,894.40 a year. The basic portion is $610.46. The average for new beneficiaries is lower. The maximum is not a promise.
- A self-employed person is not automatically inside EI. Opting into special benefits is a separate registration. Read the EI guide before you count the $729.
- If you pay for your own disability policy, the benefit is generally outside the taxable wage-loss rules that apply when an employer pays. The premium is generally a personal expense.
- This page does not quote a disability premium. Insurers price occupation, income, waiting period, and definition. Those numbers belong on an illustration.
What do EI and CPP disability pay in 2026?
| Program | 2026 published ceiling | What it is not |
|---|---|---|
| EI sickness | 55 percent of insurable earnings, maximum $729 a week, up to 26 weeks. Family supplement cannot push the week above $729. | Not a two-year or to-age-65 benefit. Not automatic for a sole proprietor who never opted in. |
| CPP disability | Maximum $1,741.20 a month for 2026, of which $610.46 is the basic amount. ESDC's average for new beneficiaries, cited on the benefit page as of October 2025, was $1,234.68. | Not an own-occupation plan. ESDC says other disability income, including a private insurer, may change what that insurer pays if CPP is approved. Disclose it. |
| Personal disability policy | Whatever the contract says, after the waiting period, for the benefit period, if you meet the occupation definition. | Not EI, and not a critical-illness lump sum. |
Sources: ESDC pages linked below. Quebec residents look to the Quebec Pension Plan for the provincial disability pension. This table is the Canada Pension Plan figure.
Who should pay the premium, and why does tax change the benefit?
CRA's payroll guidance treats periodic benefits from a wage-loss plan as taxable when the employer has contributed, under paragraph 6(1)(f) of the Income Tax Act, with a reduction for employee contributions. An employee-pay-all plan, where employees legally pay the entire premium, is the case where those benefits are not included under that paragraph. Interpretation Bulletin IT-428 is the archived CRA bulletin that draws this line, and later CRA letters still use it. A self-employed person who buys and pays an individual policy is not in an employer plan. The benefit is generally not employment income. The premium is generally not a deduction against business income, because it insures a person, not a furnace.
Business overhead expense insurance, which is aimed at rent, staff, and other office costs rather than the owner's groceries, is a different contract. Ask the person who files the T2125 whether that premium is deductible. Do not assume the owner's personal disability premium is. Group coverage you might lose by leaving employment is the group versus personal page. Incorporating, which is its own decision, does not create disability coverage.
A consultant in Ontario needs $5,000 a month, after tax, to keep the household. That $5,000 is a spending assumption, not a contract maximum and not a tax bracket. If the disability benefit is tax-free because the owner paid the premium, a $5,000 monthly benefit matches the spending. If the benefit is taxable, an illustrative 30 percent tax means $5,000 is 70 percent of the gross benefit. Gross is about $5,000 divided by 0.70, or about $7,140 a month. The 30 percent is an assumption so the arithmetic is visible. It is not your marginal rate. Look up the rate on the return you actually file, then gross the benefit up. Under-insuring because you copied an employee's 60 percent of salary, on a taxable group plan, onto a tax-free personal policy is a different mistake in the other direction. Read which tax applies before you copy a percentage.
CPP disability at the 2026 maximum is $1,741.20 a month. If a private contract offsets CPP, which many do once CPP is approved, the personal benefit can shrink by that amount. Build the illustration with the offset disclosed. EI at the 2026 maximum for all 26 weeks is $729 times 26, or $18,954, and then it stops. A waiting period on the private policy that is shorter than the cash you hold, and a benefit period that continues after week 26, is the design. The consulting-rate guide is how the invoice was priced before anyone was sick.
Which contract words matter more than the brochure?
- Occupation definition. "Own occupation" pays if you cannot do your occupation. "Any occupation" pays if you cannot do work you are reasonably suited for. The word in the specimen wording is the product. The disability guide walks through it. Do not buy a title.
- Waiting period. Contracts offer a period you choose, often in 30-day steps. A longer wait usually costs less and requires more cash on hand. The price difference is on the illustration, not here.
- Benefit period. To age 65 is a different promise from two years or five years. Match it to how long the household can survive without the draw.
- Income the insurer will cover. Carriers cap the benefit as a share of earned income. The cap is in the contract. A dividend from a corporation and a T2125 net income are not the same earnings number. Show the underwriter the income you want insured.
- Residual and partial disability. Self-employed people often return part-time. A contract that pays only if you are fully unable to work misses that month. Ask.
Assuris's 2023 protection schedule, still published on its site, protects monthly income at $5,000 a month or 90 percent, whichever is higher. A benefit under $5,000 a month is kept in full on that rule. A larger monthly benefit can be reduced to 90 percent. That is failure protection, not a target benefit.
Frequently asked questions
Do self-employed Canadians get EI sickness benefits?
Not by default. The 2026 employee sickness benefit is 55 percent of insurable earnings up to $729 a week, for up to 26 weeks. A self-employed person can access EI special benefits only if they have registered and qualified under that program. If you have not, the $729 is not your coverage. The EI guide is the opt-in. This page is the private contract you price because 26 weeks is a short ceiling.
Will CPP disability replace my consulting income?
The 2026 maximum is $1,741.20 a month, and the average new benefit is lower. You have to meet Service Canada's test and have enough contributions. ESDC also says a private insurer may reduce its payment if CPP is approved. Treat CPP as a possible offset you disclose, not as the plan.
Are disability insurance premiums tax deductible for a sole proprietor?
Premiums on a personal disability policy are generally a personal expense, and the benefits, because you paid for them, are generally not taxable. That is the useful trade. Overhead insurance that pays business expenses is a different policy. Confirm the deduction with whoever signs the T2125. Do not deduct the personal premium because it was paid from the business account.
Should I buy critical illness instead?
Critical illness pays a lump sum if you meet a condition and survive the waiting period. It does not replace a monthly draw for a back injury that is not on the condition list. Many self-employed people need the monthly contract first. The critical-illness guide is the second decision, after the income hole has a policy.
How long a waiting period should I pick?
As long as your cash can honestly carry, because a longer wait is usually a lower premium. If the emergency fund covers 90 days of spending, a 90-day wait matches the cash. If it covers two weeks, a long wait is a gap, not a saving. The premium for each choice is on the illustration. This page will not invent it.
Does a corporation's group plan count?
A one-person company can sometimes buy a group-style plan, and the tax follows who pays. If the company pays and the benefit would be taxable, you may need a larger gross benefit to land on the same after-tax spending. If you leave the company or wind it up, read whether the coverage converts. The group-versus-personal page is that exit. Personal coverage you own survives the wind-up.
Sources
- ESDC: EI sickness benefit amount, 2026
- ESDC: what EI sickness benefits offer
- ESDC: CPP disability amounts
- ESDC: CPP maximums, January 2026
- CRA: premiums and contributions to insurance plans
- Assuris: protection levels, including monthly income
The benefit is income. The premium's tax status is a filing choice.
T2125 expenses, instalments, and CPP contributions on self-employed earnings are the 2026 tax guide.
Get the 2026 Tax Guide — $49 CAD
