Long-Term Disability FAQs

Frequently Asked Questions

What is long term disability insurance?

In the event of an injury or illness where you are not able to return to work, long term disability insurance offers some protection by providing you with a portion of your income that can go towards bills, expenses, and medical treatment and/or rehabilitation. Essentially, it aims to offset any financial hardship you might suffer as a result of being unable to return to work due to a medical condition.

Most policies provide benefits for the first two years if you are unable to meet the requirements for performing your own occupation, but after two years you must be unable to perform the tasks required by any occupation for which you are reasonably qualified by education, training or experience in order to retain long term disability benefits.

Watch this video to learn more about long term disability insurance in Ontario (View all LTD videos):

What is the difference between short term disability and long term disability insurance?

Short term disability insurance can provide you with replacement wages in the event that you are temporarily unable to work. Long term disability insurance provides more permanent income replacement as your medical condition prevents you from working over a longer time period. Note that disability benefits are different from workplace insurance benefits as disability benefits arise from an illness or injury which is not required to occur on the job, whereas workplace compensation benefits are given as a result of being in the course of your employment.

What is the difference between individual disability insurance and group disability insurance?

Individual Disability Insurance is purchased by individuals privately in order to provide a safeguard against illness or injury which results in temporary and/or complete or total disability that prevents them from being able to work. You may choose to purchase additional disability insurance even if you already have some coverage from your employer. Insurance companies will usually offer a larger variety of features for individual disability insurance policies than they will for employer’s group disability insurance policies.

Group Disability Insurance is purchased by businesses and provides disability coverage to employees who are temporarily and/or completely or totally disabled and therefore unable to work as a result of a medical condition. If in a group plan, payments for the premiums may be paid by you through your paychecks or your employer may pay all or part of the premiums itself. Ask your employer if you are covered under such a policy.

What types of disability insurance are there?

Short Term Disability Insurance provides temporary income replacement if you are unable to work due to a medical condition (injury or illness). Usually this policy only covers income replacement for the first 120 days. Short term disability insurance benefits are usually purchased by employers for their employees

Long Term Disability Insurance offers a form of income protection in the event that an illness or disability leaves you totally or completely unable to return to work. It provides you with a portion of your income that can go towards living expenses which may also include medical treatment and rehabilitation. For the first two years if you are unable to meet the requirements of performing your own occupation then you are eligible. After two years you must be unable to perform the tasks required by any occupation for which you are reasonably qualified, or could become qualified for, by reason of education, training or experience, in order to retain long term disability benefits.

Critical Illness Insurance provides financial support in the event that a person is diagnosed with a ‘critical’ illness. Depending on the policy you purchase it may include cancer, stroke, heart disease, heart attack and usually 10-20 other serious medical conditions. These benefits will be paid regardless of the person’s ability to return to work. The benefit is paid in one lump sum; however, there is a ‘survival period’ for typically 30 days once diagnosed with the condition which must pass before that person can receive benefits.

Disability Mortgage Insurance provides you with financial support in the event that you become disabled and are unable to work. This policy covers all or part of your mortgage payment up to a certain amount bi-weekly or per month. There is typically a 60-day waiting period before you can receive benefits. There are also limitations in regards to duration and the amount of coverage that will be given.

Who pays for long term disability coverage?

Long term disability insurance can be purchased privately by individuals through an insurance broker or directly through an insurance company. Long term disability insurance can also be made available for purchase through your employer through a group disability insurance policy. In cases of group insurance through your employer, the insurance premiums could be paid by the employer, the employee or shared between the employer and the employee. Depending on what applies to you there are different implications for tax purposes.

If the employee pays the premiums for the long term disability insurance then disability payments are not taxable. If the employer pays for the disability insurance premiums then when the payments are made to the disabled employee they are taxable. The law is more complicated when the premiums are shared between an employee and employer.

What types of disability allows me to qualify for long term disability benefits?

Most long term disability policies cover you regardless of the severity or type of illness or injury you are suffering from that prevents you from working. However, some policies exclude certain illnesses, and others may exclude injuries or illnesses which are compensable under a Workplace Safety Insurance Board claim, if it is available through your workplace.

Generally, if you are not able to do all or substantially all of the tasks required by your current job then you will qualify for long term disability benefits. Essentially, the threshold is that your disability prevents you from being able to work. However, depending on your policy it may state that in order to qualify for disability benefits you must prove that it is not only your own job that you are unable to do, but any job that you may be qualified to do in consideration of your education, training or experience. Refer to your policy to see what applies to you.

Will I have to file a claim in order to receive long term disability benefits?

Yes, if you want to receive long term disability benefits it is required that you file a claim. Depending on where you are receiving your disability insurance consult your employer benefits booklet or your own private insurance policy. If you are receiving coverage from your employer contact your company for instructions on how to file your claim. Otherwise contact your insurance provider. Either way you will be required to fill out a claims form which will be provided to you by your employer or your insurance company.

What information is required on my disability claims form?

Information required when filing a disability claims form includes general demographic information, banking information, claim information, a list of health care professionals you have consulted, other income sources, occupational information, and diagnostic and treatment information regarding the physical and psychological aspects of your disability. Your claim will have different components to fill out for you, your employer, and physicians.

Specifically, for the claim information you will have to include the illness or injury you suffered (how, when and where), the symptoms, when you stopped working, when you received treatment by a physician, the duties of your occupation and why you are unable to perform them, etc.

While your own physician is likely required to fill out a form describing your condition and prognosis, the insurance company may ask you to be examined by one of their own doctors as well.

It’s very important that you accurately describe your symptoms to healthcare practitioners, so they can help you receive the care and compensation you need.

Watch this video about how to accurately describe pain to your doctor (View all LTD videos):

Are there deadlines when making a claim for long term disability insurance benefits?

Yes, there are deadlines or time limitations that are in place which can affect your ability to assert your claim. Therefore, don’t delay in contacting a disability insurance lawyer who will guide you through the process and notify you of any deadlines.

In order to receive disability benefits is it required that I be confined to a hospital?

No, hospital stays are not a factor in assessing the legitimacy of your disability claim as many medical conditions do not require long stays as treatment can be done at home or by professionals in other facilities.

What does it mean if my policy says that I must be “completely disabled” in order to qualify for benefits?

If in your policy it says that you must be “completely disabled” or have a “total disability” there may be a specified meaning according to your policy, usually in a definition section of the policy. Generally, it means that you are reasonably unable to carry out the normal functions of your usual job. It does not mean that you are physically unable to carry out the tasks of your job. Instead it means that in order to recover from your medical condition it is better for your health if you do not work.

Why does the insurance company require me to have an assessment done with a doctor they have chosen even though I have already gone to see my own doctor about my long term disability claim?

Within many long term disability policies there are provisions that require you to be assessed by a health care practitioner of their choosing in order to determine if you are entitled to benefits. When filling out your claim you are still required to go to your own doctor for an assessment.

While it is required that these insurance companies select health care practitioners that are reasonably qualified to undertake an assessment and the claimant’s exam must be reasonable, it is important to keep in mind that insurance companies make their money by collecting premiums not paying out claims. If you feel as though there has been unprofessional conduct by these assessment practitioners contact a qualified lawyer.

Is it legal for insurance companies to hire someone to follow and videotape me?

Yes, it is legal and normal for insurance companies to hire investigative companies to photograph and videotape claimants in order to assess the validity of their disability claim. The reason for this is that they want to ensure that there are no fraudulent claims or misrepresentations. Therefore, it is important that you be honest when filing your claim and speaking with doctors, specialists, your insurance company and your lawyer. However, if you feel as though investigative companies are putting you in danger, are trespassing, invading your privacy, or otherwise breaking the law you should contact the police.

How long do I have to wait to collect long term disability benefits?

Once you have made a claim how long you have to wait in order to collect your disability benefits depends on your policy as your claim must be evaluated, approved and a mandatory waiting period must be completed. If your employer has a short term Disability plan the waiting period to access the benefits under your plan is usually within 5 days.For long term disability benefits, you will need to be off of work for several months before you can collect benefits. This waiting period is called an ‘elimination’ or ‘qualifying’ period and it can range from 90 to 180 days. Consult your policy and your employer for clarification.

There are alternatives if you do not have access to a short term disability plan. Instead you may qualify for Employment Insurance or Sickness Benefits through the Government of Canada. This can provide up to 15 weeks of sick benefits.

How much will I receive from long term disability insurance benefits?

For employer-sponsored group long term disability insurance, benefits can cover 50% to 80% of your pre-disability salary, with a typical policy covering 66.66%. However for many policies, there may be monthly maximums which put a limit on the amount you can receive.

For individual, private disability policies, benefits are pre-determined by the disability policy so that an injured or sick person already understands what their monthly disability benefit will amount to in the event they are unable to work.

How long do the long term disability insurance benefits last?

The duration of your long term disability insurance plan depends on the policy you have purchased. Some have a set time frame such as 5 or 10 years, while others can last until you are 65 years old. There are policies that also have a lifetime benefit which usually pays a percentage of what you were receiving up to age 65 and then a lesser amount for the next 5, 10, 15 years or even for life.

Are my benefits taxable?

Generally, if you, the employee, have an individual disability insurance policy where you pay the premiums then any payments you receive are not taxable. If the employer pays the premiums for the employee’s disability insurance policy then when the benefit payments are received by the disabled employee they are taxable.

Can other benefits be deducted from my long term disability payment?

Yes, most long term disability policies typically have provisions which reduce the monthly payment you receive by accounting for:

• Benefits payable from any Workers’ Compensation plan, including Workplace Safety Insurance payments
• Disability benefits received under any other government program such as, Canadian Pension Plan- Disability, Ontario Disability Support Program, Employment Insurance- Sickness Benefits, etc.
• Income from the Criminal Injuries Compensation Act
• Wages or remuneration payable from, any employer, including any statutory or common law termination and/or severance pay

Consult your policy for specifics as your long term disability benefit may also be reduced by monies payable to your dependents (i.e. minor children) for the aforementioned areas.

Can my long term disability insurance company force me to apply for Canadian Pension Plan (CPP) Disability or other benefits?

Many policies contain provisions that allow the insurance company the power to make you apply for benefits from another source. If you apply and are denied benefits you may be required to appeal the decision. Consult your insurance policy or speak to an insurance representative to see what applies to you and your policy.

What policy ‘riders’ can you purchase with long term disability policies?

A policy rider or endorsement provides extra coverage to your already existing long term disability policy. These riders are usually only offered with private disability policies and if not purchased at the time of the original application, will require that a medical form be completed before the rider can be added into the policy.

a) Cost of Living Adjustment
This rider policy considers your salary and inflation yearly and adjusts your benefits accordingly.

b) Own Occupation to 65
Professionals or people with specialized skills may find this rider policy beneficial as it eliminates the ‘Any Occupation Test’ and provides the disabled individual with long term disability benefits as long as he/she is unable to perform the essential duties of their own occupation or until age 65, whichever is sooner.

c) Future Earnings Protection Option
When you initially apply for your long term disability policy you are required to provide your current salary as this is needed to determine what your long term disability payment would be in the event of an illness or injury that prevents you from returning to work. Most often when you have a wage increase your policy should be readjusted to reflect this change. However, wage increases result in a larger disability payment which triggers a new policy application which then triggers a new medical. A future earnings protection option allows you to avoid providing a new medical. This can be invaluable in the event your health has deteriorated since your last application for disability benefits was submitted.

Does long term disability provide extended medical or dental care as well?

No, long term disability policies are designed to only provide wage replacement. However, if you have a benefit plan with your employer and are unable to return to work because of a long term disability then you may be able to get a benefit continuation paid by your employer while you are on long term disability.

I am on long term disability, and my employer terminated my employment. What does this mean for my long term disability entitlement?

As long as you were actively employed at the time you became disabled then your termination of employment should not affect your long term disability entitlement. However, any termination and/or severance payments may be deducted from your long term disability entitlement. The situation may be more difficult if you were on short term disability at the time you were terminated or were on temporary layoff when you became disabled.