Written By: Lindsay Charles, Partner, and Emily Roti, Summer Student
It is important to consider long-term disability (LTD) coverage to protect your financial future. Imagine being unable to work for months, or even years, due to a serious illness or injury. Without a steady paycheck, how would you cover your mortgage, utilities, groceries, or childcare? That’s where LTD insurance comes in. It’s designed to replace a portion of your income if you’re unable to work for an extended period, offering financial stability when you need it most.
What Is Long-Term Disability?
Long-term disability is a condition where an individual is unable to work for an extended period due to a severe illness, injury, or medical condition. This inability to work can be temporary, lasting for months, years, or it can become permanent, preventing the individual from returning to their job.
What is Long- Term Disability Insurance?
Long-term disability insurance provides monthly income replacement if a physical or mental condition prevents you from working for an extended period, It generally begins after other benefits, such as short-term disability insurance, employer-paid sick leave, or Employment Insurance (EI) sickness benefits, have ended.
In Ontario, there’s usually an elimination period (or waiting period) before LTD benefits begin, typically lasting 90 to 120 days after your disability starts. During this time, you may need to rely on savings, paid sick leave, or short-term disability benefits.
Once your claim is approved and the waiting period has passed, LTD benefits are paid monthly, typically replacing 60% to 70% of your regular income, though some policies may pay up to 85%. Unlike health insurance, which covers medical expenses, LTD is meant to help with daily living costs.
The duration and conditions of LTD benefits depend on your specific policy. Some plans provide coverage for up to two years if you’re unable to return to your own job. After that, you may continue to receive benefits only if you’re unable to work in any occupation. Benefits may continue until recovery, the end of the benefit period, or even until retirement age, depending on the terms of your policy. However, some other plans have a different “test” for disability which could make it easier to access your insurance for a longer duration.
As mentioned, each LTD policy differs, but features typically include:
- Coverage amount
- Monthly premium
- Definition of disability
- Maximum benefit period, often up to age 65
Unlike short-term disability benefits, which support temporary absences, LTD insurance is designed for long-term or permanent work disruptions, offering vital financial stability during extended periods of illness or injury.
How can you obtain LTD?
You can obtain LTD insurance in several ways. Many employers offer group long-term disability insurance as part of their employee benefits package. This is often the most affordable option, although the coverage may be limited or non-portable if you change jobs. If you don’t have access to employer-sponsored LTD, or if you want more comprehensive coverage, you can purchase an individual policy through an insurance provider. These policies tend to be more flexible and customizable. Some professional associations also offer discounted group policies to members.
The Importance of Honesty in Your LTD Application
When applying for LTD, it is important to be truthful and transparent about your medical history, current health conditions, and employment details. Failure to disclose relevant information can result in your claim being denied later for non-disclosure or misrepresentation.
Insurance companies have the right to investigate your claim, including reviewing your medical records and employment background. If they discover that you omitted a previous diagnosis, ongoing treatment, or other significant details, they may deny your claim, even if your disability is legitimate.
Being up front from the start not only ensures that your application reflects your true situation, but it also protects you from the denial of benefits at the time you need them most.
Conclusion
Long-term disability insurance is a smart investment in your financial security. Whether through your employer or a private insurer, having this coverage can protect your income, protect your lifestyle, and give you peace of mind. If you haven’t reviewed your disability insurance options, now is the time. The best time to prepare for the unexpected is before it happens.
