What is Long Term Disability Insurance and Why is it Important?

It is important to know the opportunities you have to protect yourself and your family in case of an unexpected event. Long-term disability provides coverage when you are injured and unable to work. It supplements your income and in some cases, it can help you cover rehabilitation.
Long Term Disability Insurance is a policy payout from your insurance company when you become disabled. Usually, a long-term disability benefit begins after your short term disability, employee sick leave or Employment Insurance (EI) benefits end after the first six months of your disability.
Each long term disability insurance policy can differ from person to person, depending on your age, occupation and income. When a long term disability policy is in effect it can replace your income. Long-term disability benefits remain as long as you are disabled or until the age of 65. Certain insurance companies can extend the benefits for 24 months before the age of 75. However, you can be eligible for the Canada Pension Plan (CPP) disability benefit. The CPP benefit is only available to those that have made a contribution to their CPP.

Type of disability and Occupation

Each insurer varies their definition of disability. Some insurance companies state that you must be unable to perform all functions of your job while another state that you must be unable to perform major duties of your job.
Another common definition in policies is the variation of occupation. There are three types: any occupation, regular occupation, and own occupation.
Any Occupation
This type only pays for benefits if you are unable to work at all. You will not qualify if you can work in a different job.
Regular or own Occupation
This type pays for benefits if you are unable to perform the important duties of your regular job.
Before agreeing to a policy check what is your insurance company definition of disability, type of occupation they cover, exclusions and pre-existing conditions and determine which term is best for your needs.

What can affect your benefits?

Your benefits can reduce a certain amount if you are receiving disability benefits from other sources such as Worker’s Compensation. Other sources of disability income can offset your long term disability.

Taxable or non-taxable

Your long term disability insurance can be taxable if your employer is paying the premiums for your coverage. If you are self-employed, you can opt to have your benefits non-taxable.
Now, what happens if you are denied or terminated for your long term disability benefit?
If it comes a time that your insurance company denies you for your benefit, you have the right to fight for your claim. There are many reasons a claim can get denied. As frustrating and challenging it can be, a disability lawyer can advocate for your right to claim your benefit and make your road to recovery an easier one. Termination of your benefits can place a hardship on yourself and your family. There are various reasons your benefits can be terminated.
Below is a list of possible reasons:

  • You are the age of 65 or attain the age of 65
  • In prison
  • Retired
  • Required documentation was not submitted
  • Recovers
  • Refuses to participate in treatment program
  • Fails to report for a medical examination
  • Starts a new job
  • Refuses to continue application process
  • Death (in some cases your estate can receive a lump sum of your benefits)
    In cases of termination or denial, our team can assist throughout your claim.

Understanding your policy

All long term disability policies have variant definitions, exclusions, and limitations. Before putting forth a claim understand what is your policies. Here are a few terms you might come across:

  • Mental Conditions
  • Pre-existing conditions
  • Waiting period
  • Duration of benefits
  • Taxability of benefits
  • Definition of disability
  • Individual or Group plan
  • Renewable
  • Non-concealable
  • Evidence of insurability
    Protecting yourself and your family is an important part of your life. An injury at work can come at any time and a long term disability plan can help you foresee the tragedies in the future. When an unexpected termination or denial occurs during your claim, a well-established team should be by your side. We have represented many clients that have had their claims terminated and denied and we have assisted them throughout the process. We are a team of experienced lawyers serving the York Region.

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