It only takes one moment for your life to change. A split second on the highway, a driver rearends you at a stop light, a sudden slip on the stairs, or a diagnosis that arrives without warning.
Most people never imagine they could become unable to work. Yet every week, people across Ontario find themselves facing a reality they never prepared for: their income has stopped, but their financial responsibilities have not. Mortgage payments, utility bills, and grocery costs continue, while the safety net they believed would protect them begins to unravel.
Long-term disability insurance exists for exactly these moments, but the kind of coverage you have and who pays for it can make all the difference between financial stability and financial hardship.
Understanding What Long-Term Disability Insurance Covers
Long-term disability insurance offsets a portion of your lost income (most policies usually provide around 60 per cent) if an illness or injury prevents you from working. It generally begins once short-term disability benefits or sick leave end and can continue for as long as you remain disabled, up to age 65 (depending on the policy).
Most long-term disability policies are structured in two stages:
- Own Occupation Period: For the first 24 months, you are eligible for income benefits if you are unable to perform the essential duties of your own occupation.
- Any Occupation Period: After those initial two years, benefits continue only if you can prove you are unable to work in any occupation for which you are qualified, based on your education, training and experience.
Once the policy shifts to the any occupation definition, insurers often reassess eligibility. They may determine that you are capable of performing alternative work from your original role, even if it requires a different skill set or pays less than your previous position. This can create unexpected financial gaps for claimants who are still unable to earn a livable income.
How Long-Term Disability Insurance Protects You
The purpose of long-term disability coverage is to ensure that you have income while you are unable to work due to medical reasons. It helps you maintain financial stability while focusing on your recovery and provides reassurance that your and your family’s needs can be met.
Without long-term disability coverage, individuals facing serious injuries such as traumatic brain injury, chronic pain, or mental health challenges may quickly deplete their savings. The costs of rehabilitation, medications, and daily living expenses can become overwhelming. LTD benefits act as a financial lifeline during these periods, helping to cover ongoing obligations like rent or mortgage payments, utilities, and family expenses.
Employer-Paid vs. Privately-Paid LTD Coverage
While it is valuable to have employer-provided long-term disability coverage, there are critical differences between employer-paid and privately-paid policies that can affect both the amount and duration of benefits.
Here are some of the main benefits of paying for your own long-term disability plan:
Tax-Free Income: When you pay premiums yourself, the benefits you receive are non-taxable. This means the income you rely on during your disability period is worth more.
Independence from Employment: Your private policy continues even if you leave or lose your job, providing uninterrupted protection.
Customization: You can choose the level of coverage and policy terms that best match your needs.
Control: You manage your relationship directly with the insurer and can have greater clarity about what you’re entitled to.
Income Supplementation: Private long-term disability can close the financial gap left by employer-paid benefits that typically only cover 60 per cent of your income.
| Feature | Employer-Paid LTD | Privately Paid LTD |
|---|---|---|
| Premium Payment | Employer covers all or most of the cost | You pay the full premium |
| Tax on Benefits | Benefits are taxable income | Benefits are tax-free |
| Portability | Ends when employment ends | Remains active even if you change or lose jobs |
| Coverage Amount | Generally covers up to 60% of salary | Can be customized for higher income protection |
| Policy Control | Employer chooses the terms and insurer | You control policy terms and the insurer |
| Claim Privacy | Employer may be informed of your claim | Managed directly with the insurer, preserving privacy |
Why Private Long-Term Disability Coverage is Essential
Employer-paid disability benefits are a strong foundation, but are rarely sufficient for long-term security. Private coverage provides a crucial layer of financial protection that remains with you regardless of where you work or how long you are employed.
When disabilities last beyond two years, employers can terminate the employment relationship, leaving individuals without access to the group benefits tied to their job. However, if you have your own long-term disability policy, your benefits continue for as long as you meet the medical criteria outlined in your plan. This means you can still rely on a monthly disability benefit, no matter if your employment ends.
Private coverage can also supplement the shortfall between your normal earnings and the 60 per cent replacement rate typically offered by employer plans. For many, that 40 per cent represents essential income needed to maintain ongoing payments, like mortgages or vehicle payments, and support their families.
When Disability Changes Everything
For individuals recovering from brain injuries or other serious conditions following a motor vehicle accident, the difference between employer-paid and private long-term disability coverage may determine whether they maintain independence or face financial instability.
Disabilities that arise from motor vehicle accidents are not limited to visible physical harm. Many people experience invisible injuries such as cognitive impairment, post-concussion syndrome, or chronic pain that affect memory, concentration, or emotional regulation. These symptoms can make it impossible to perform even desk-based work that seems, on the surface, “less demanding.”
The reality is that disability, no matter whether physical or psychological, can affect anyone regardless of occupation, lifestyle, or age. It reshapes how you live, how you work, and how you plan for the future.
Private coverage ensures that when life-altering conditions occur, your financial security does not collapse alongside your ability to work. It provides ongoing, reliable income support when recovery takes longer than expected, allowing you to focus on treatment, rehabilitation, and rebuilding your life without the constant anxiety of financial loss.
The Takeaway
Employer-paid long-term disability insurance offers valuable protection, but it is limited in scope and duration. Private coverage provides stability, control, and peace of mind by ensuring that your disability insurance continues even if your employment does not.
If you or a loved one has had their long-term disability claim terminated by an insurance provider, we urge you to contact our team. Our firm has over 25 years of experience navigating long-term disability claims, and we fight to secure individuals with the full benefits they are owed to support their recovery and rebuild their lives.
