Long-Term Disability Benefits

Questions and Answers about Long-Term Disability Benefits in Ontario

Long-term disability is a type of disability income insurance that provides periodic payments to a disabled claimant because you are unable to work due to an injury or chronic illness.

What types of Disability Benefit Claims can I make in Ontario?

There are five main types of claims that may be available to a plaintiff who suffers a chronic illness or injury:

• Short-term disability (STD) benefits.
• Long-term disability (LTD) benefits (group or individual).
• Canadian Pension Plan (CPP) disability benefits.
• Employment Insurance benefits.
• WSIB

What do long-term disability policies normally provide?

The first thing to keep in mind is that LTD claims are purely contractual. Your insurer and its underwriters draft the contract.  LTD policies generally cover any type of injury or illness that prevents the policyholder from being able to work (where the claim is not covered by workers’ compensation benefits (WSIB)).  The level and amount of coverage depends on the policy provisions, wordings and exclusions.  Some policies exclude certain illnesses, while others exclude work-related injuries or illnesses.

How are long-term disability policies typically purchased?

Policies may be purchased by the individual or be part of a group employment package. Premiums are paid in one of three ways, by the:

• Policyholder individually.
• Employer solely.
• Employer and employee

What is the qualifying period?

There is usually a qualifying or elimination period, which can range from 90 to 180 days, during which no benefits are paid but the person may cover their lost wages by drawing on an STD policy, EI or government sickness benefits, which may provide an additional 15 weeks of sick benefits.  STD policies are usually paid for by the employer and cover income replacement for the first 120 days of injury or illness.

How long can I get long-term disability benefits for?

An LTD policy generally pays a portion of the policyholder’s usual salary or income as a monthly benefit until the person is:

Able to return to work.
No longer meets the definition of being disabled.
Reaches retirement age (age 65), so long as the person continues to meet the policy requirements.
Some policies only pay for a defined period (such as 5, 10 or 15 years). Other policies cover the person for life.

How much is the typical amount of benefit?

Policies may provide, for example:

Benefits equal to:
65% of gross monthly earnings;
75% of net monthly earnings;

Benefits that last:
up to age 65; or
for only fix years.

Reductions may apply so that the employee’s total income from all sources does not exceed a certain amount. For example, the policy provision may state that the employee’s total income from all sources is not to exceed 85% of the employee’s pre-disability earnings if the benefit is taxable or 85% of the pre-disability net earnings if the benefit is non-taxable.

Benefit amounts may also be reduced by other benefits that a person receives or in entitled to receive from sources specified by the long-term disaiblity policy wording.

What is a “Total Disability”?

The definition of “total disability” varies from policy to policy and impacts the level of disability coverage available.  “Totally disabled” generally means reasonably unable to work or, more specifically, unable to carry out the normal or substantial functions of the individual’s usual job. The threshold for qualifying for LTD benefits is usually a person’s inability to do all or substantially all of the tasks required by his current job (“own occupation” for the first 24 months of disability.

What is the “Change in Definition” that my adjuster keeps telling me about?

Typically, Long-term disability policies contain a provision that considers a person eligible to receive benefits if he is disabled from working at his own occupation for the first two years. This is known as the “own occupation” (own occ) period. Thereafter, the test changes to a more difficult definition which requires the individual to be disabled from performing any occupation for which he is reasonably suited (language like “qualified, or could become qualified for, by reason of education, training or experience”). This is known the “any occupation” (any occ) period.

Because the test for the “own occupation” period is less onerous, and the insurance company’s potential exposure is lower, insurers will often pay benefits during the “own occ” period, but you may find resist paying your benefits into the “any occ” period.

Can my LTD benefits be reduced by other things?

Some typical sources that may reduce the LTD benefit amount include benefits the you receive or in entitled to receive from:

• Canada pension plan (CPP).
• Workers’ compensation (WSIB) or similar coverage.
• Group, association or franchise plan.
• Retirement or pension plan.
• Earnings or payments from any employer, including severance payments and vacation pay
• Self-employment income.
• Government plans, except those that are excluded such as EI benefits.

Are long-term disability benefit always reduced by CPP?

Yes, most policies have a requirement that the insured apply for CPP disability benefits and, in some cases, also require the insured to appeal a denied claim. In addition, there may be a provision for an offset for CPP disability benefits received by the insured.  Also, where the policy language is clear, CPP benefits belonging to the children of disabled contributors may be offset.

What about severance packages, is that deducted from my LTD payment?

The deductibility of severance packages depends on the policy wording for the most part. If the wording is clear and unambiguous, you will have to look no further, but that is not always the case. Where the wording is not clear, consideration must be given to the nature of the severance package.

Have you been denied or cut-off your long-term disability benefits? Call our long-term disability lawyers today.

If you have any questions about your long-term disability policy or if you have been cut-off or denied long-term disability benefits, call our long-term disability lawyers today at 905-333-8888 for your free no obligation consultation. We would be happy to discuss your benefits with you. We will respond the same day and we offer no fees or costs unless you get paid. our disability lawyers represent disability insurance claimants all over Ontario.

Call us at 905-333-8888 or fill out a contact form and one of our staff will get back to you within hours.