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Long-term disability insurance part 1: the basics


With almost two decades of experience advising clients with long-term disability (LTD) claims, Ottawa personal injury lawyer Najma Rashid has answered just about every question you can think of when it comes to LTD insurance.

Here, Rashid, a partner with Howard Yegendorf & Associates, the answers to some of the most frequently asked queries she has faced.

Q. What is LTD insurance?

A. It’s an insurance policy that pays you a monthly benefit if you become unable to work due to an illness, a long-term medical condition or after suffering an injury in an accident.

Q. Are there different types of plans?

A. Many LTD plans are offered through employers as an employment benefit, but they can also be bought privately. The benefits available under these plans are available over two time periods: The “own-occupation” period typically lasts for the first 24 months and provides coverage if you’re unable to do most of the tasks of your usual employment. After that, you enter the “any occupation” period, where you only get the benefit if your condition prevents you from doing any work for which you may be qualified (or may become qualified) by reason of education, skills or experience. Some policies (usually those you purchase privately) will provide “own occupation” coverage beyond 24 months and up to the date of retirement.

Q. When does the coverage kick in?

A. Each policy is different, but most have a qualification period, typically for 60, 90 or 120 days. The purpose of this period is to distinguish between temporary sicknesses and more prolonged disability, and some workplaces will have short-term disability programs to cover this time.

Q. How much will I be entitled to?

A. Policies vary, but the benefit amount is usually between 60 and 85 per cent of your income. Often there is also a cap on the monthly amount, although some can be increased to take into account increases in the cost of living.

Q. What kinds of exclusions are there?

A. There is no one-size-fits-all policy, so you need to closely read the terms for any exclusions. In some cases, they will have exclusions for pre-existing conditions or for certain listed medical problems that will not be covered. Many will specify deductions to benefits if you’re in receipt of Workplace Safety and Insurance Board or Canada Pension Plan disability benefits. In addition, some policies stipulate that the monthly benefit is only available for a finite amount of time, while others are payable until the age of 65 in certain circumstances.

Stay tuned for part 2 of this mini-series, where Rashid will explain what happens when insurers deny LTD claims.