Many Canadian employers offer long term disability in their employment package as a way of engaging, retaining and supporting their staff. Long-term disability insurance is designed to protect the insured against accidents illness or injuries that impact on their ability to work. Every LTD policy is unique but there are some similar aspects that you should be aware of just to ensure you’re adequately protected. We’ll go over some common provisions of LTD policies available today.
What’s the elimination period?
The elimination period given on your LTD policy is that period of time where the employee must be off work before the benefits start. In most policies, the employee will only receive the benefits after exhausting their sick days, short-term disability benefits or any other sick benefits given by the employer. It is only after this period lapse that the LTD benefits can start.
What is the Own Occupation Period?
The insured will be assessed based on his/her ability to perform the duties of the occupation they were employed on at the time of the onset of disability. It is important that an experienced lawyer review the disability test to determine entitlement to benefits. However, after receiving the benefits for a period of time, usually two years, the definition of disability will now change. The employee will usually be evaluated based on their ability to perform any meaningful work that a person in a similar state is reasonably qualified to perform. This period is very critical as the employee’s health is closely assessed. Medical reviews and patient’s records will be thoroughly scrutinized during this time. Vocational assessments are often very important in determining entitlement to benefits under the “any occupation test” as opposed to the “own occupation test”.
An experienced disability lawyer , familiar with disability insurance law is critically important in providing legal advice respecting entitlement to benefits under the any occupation test.
Payment amount
Most policies contain a maximum monthly benefit amount. Prior to disability, the employee is required to pay a certain percentage of the pre-disability income. This amount will vary and should be clearly stipulated in the contract. However, some employees prefer to pay a higher premium in order to increase the amount of payout they qualify for in the long run. Some policies will pay as high as 70% of the previous income whereas others will only pay up to 30% of previous income.
There are important clauses on your LTD contract that you should be aware of. For instance, or Canada Pension Disability Benefits, money that you receive from other sources such as worker’s compensation insurance may be deducted from your LTD benefits. Additionally, your LTD payment may or may not be taxed. In most cases, employees who pay tax or the full premium amount for the benefits will have a tax-free payment.
Recurrence clause
There are situations where the employee may return to work after having been on LTD benefits for a period of time and then become ill or sustain an injury again. The recurrence clause states that if this happens, the employee is allowed to go directly onto LTD benefits. Whether a new waiting period needs to be established will depend upon the length of time that the claimant returned to work before the recurrence of disability. The policy will need to be reviewed to determine whether a new waiting period and new period of disability will apply or whether the claimant can immediately begin to receive benefits on account of a recurrence of disability.
End date
Long-term disability benefits usually stop when the employee turns 65, returns to work or passes away. There are also cases where the insurance company suspends payments. If your LTD benefits have been denied or suspended, speak to an insurance claims lawyer.