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How Long Term Disability Cases work in a Nutshell (Ontario)

Last week’s entry of the Toronto Injury Lawyer Blog entitled “How Ontario Car Accident Cases and Pain and Suffering awards work in a Nutshell received resounding positive feedback from our readers. They appreciated how complicated legal terms and concepts were broken down in easy to understand English. This is something our law firm prides itself on.

We understand that most of our clients are NOT sophisticated lawyers with years and years of technical legal training. Most of our clients are everyday people, who have not studied law.

We do our best to make things simple to understand. Why should a car accident case, or long term disability case be spoken about like it’s rocket science? The more our clients understand, the better the lawyer-client relationship.

In that vein, we continue with our “nutshell series“. This installment will focus on how Long Term Disability cases work; along with some of the most commonly asked questions about LTD cases from our clients. If you require more information about long term disability cases, please don’t hesitate to contact Goldfinger Injury Lawyers toll free at 1-877-730-1777 or at for your free and confidential consultation.

One of the perks of employment aside from the pay, colleagues, prestige, job satisfaction, are the benefits paid by your employer. Some benefits pay for dental coverage. Some benefits pay for physio/massage coverage. Other benefits pay for disability insurance; which is the topic we are covering today.

Disability Insurance is offered through a large insurer like Great West Life, Manulife, SunLife, SSQ, Desjardins, Industrial Alliance, Co-operators, RBC Insurance, La Capitale Insurance, Empire Life, just to name a few of the big insurers for long term disability claims.

There are two forms of disability insurance: Short Term Disability and Long Term Disability insurance.

Sometimes employees are covered for just one of the two forms. Sometimes employees don’t have coverage. Sometimes employees have both coverages.

Often, the short term disability insurer is different than the long term disability insurer. This is very common.

Short Term Disability Insurance (STD) last in the short term (generally 3 months or so, give or take).  After the coverage period is over, there is no more STD insurance and it coverts to long term disability insurance (if available).

Long Term Disability insurance generally goes up to the age of 65 years old. Some policies however contain provisions that LTD insurance only lasts 2 years, 5 years, 7 years, etc. They cap the duration of the LTD coverage based on the wording of the policy under a section called “maximum duration” or “length of benefits” or “duration of benefits“.

It’s very important to know for how long your LTD benefits will be paid so you can better understand the total value of your case. If your LTD policy states that benefits will only be paid for 2 years, or up to the age of 65, whichever comes FIRST, then it’s very important to know that. Your personal injury lawyer will be able to help you better understand the duration of benefits.

Long Term Disability benefits are paid out on a monthly basis. The quantum of that monthly benefit amount is based primarily upon how much money you were earning at your job while you were working. That figure is used as a base figure. Then, we look to the wording of the LTD Policy under the “Quantum of Benefit” or “Calculation of Benefit” section.

Those sections will provide a calculation of how benefits are paid out. Generally, LTD benefit represent around 60-80% of your net (or gross) pre-disability monthly pay.

So if your policy states that you are entitled to 75% of your net monthly pre-disability pay; and you were earning $2,000/month; that means that your LTD benefit would be $1,500/monthbanner-box-logo

If your policy states that you are entitled to 50% of your net monthly pre-disability pay; and you were earning the same $2,000/month; that means that your LTD benefit would be $1,000/month.

As you can see, the higher your wage, and the higher the percentage; the higher your long term disability benefit will be.

As a rule of thumb, higher income earners will command higher levels of LTD benefits; and vice versa.

But LTD benefits get scaled down in what we call set off provisions in long term disability polices. Insurance companies LOVE set offs, because they act as credits to save them money. The rationale is that your LTD benefits should not put you in a better financial position than what’s provided for under the policy, or than you would earn if you are working.

Most LTD policies contain provisions that LTD insurers are entitled to a dollar for dollar credit of any money you receive from any other disability policy or income source. If are are receiving a disability pension from a pension plan, or a CPP Disability, or WSIB Benefits; the LTD insurer will want to know. They will then deduct dollar for dollar what income you are receiving and set off that amount against the LTD benefit owing. The result is that the insurer saves money.Goldfinger-logo-icon-300x300

Many of our clients tell me that these set off provisions are not fair. While I tend to agree with my clients, we have to remember that long term disability cases are largely contractual cases which are framed based on the wording of the LTD policy. If the wording of the LTD policy indicates that the insurer is entitled to a set off, then so be it.

On a final note, it’s important to understand that long term disability benefits don’t just fall down from the sky. They need to be applied for by the injured claimant. The process can be long, arduous and tedious. There are a lot of forms to complete which need to be completed by doctors and your employer as well. Failure to get these forms completed properly, and in a timely manner may result in your claim getting denied.

If you fail to apply for LTD benefits, you won’t get approved. If your LTD benefit application is not received at the right office, it may also jeopardize your claim. This task of getting these papers completed, and forms submitted can make or break a long term disability case.

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