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Those little loop holes in your Long Term Disability Policy: What you need to know before making a claim (Ontario)

Our law firm handles a wide array of personal injury and disability claims. Many of our cases are against large, multi-national insurance companies who provide all types of insurance coverage. One of the most common sort of claims we see are Short Term, and Long Term Disability claims against such companies as SunLife, Manulife, Great West Life, Industrial Alliance, Canada Life, Co-Operators, RBC Insurance, Desjardins, SSQ etc.

One of the biggest eye openers for our clients is what happens when they take a look at the fine print contained in their respective long term disability policies. After all nobody other than a personal injury lawyer uses an LTD Policy as their night time reading material.

These LTD policies are written by insurers, to minimize the potential exposure of an insurer; while giving the appearance that you’re getting amazing coverage. For most group and individual policies, you get what you pay for. The cheaper the policy, the cheaper the coverage. But even the best, and most iron clad policies are riddled with loop holes which may minimize your potential claim.

The purpose of this week’s edition of the Toronto Injury Lawyer Blog Post is to examine your run of the mill LTD Policy, and examine those provisions therein designed to limit your claim.

Here are some excepts from a standard LTD policy from one of the large insurers out there in Ontario.

What we will pay: Here is how we calculate your LTD Payment. We take 60% of your monthly basic earnings, rounded to the next dollar.

We then subtract any income provided to you:

  • for the same or a subsequent disability under any government sponsored plan
  • for the same or a subsequent disability under any Worker’s Compensation Act
  • under a motor vehicle insurance plan which provides disability benefits
  • under a retirement or pension plan funded in whole or in part by your employer

Not only does this claimant not get 100% of their income on disability, but that income is set off based on any amounts that may be coming in from a source listed above. The result for the insurer is less money they would be liable to pay to an LTD claimant under the Policy. That’s good for the insurer. But might not be so good for you as the claimant.

What is NOT covered: The insurer will NOT pay for any period:

  • you are not receiving appropriate treatment
  • you are not participating in an approved partial disability or rehabilitation program
  • you are absent from Canada for 4 months due to ANY reason

Leave the country for four months, and you won’t get paid benefits. If you live in a remote part of Ontario and you can’t find a doctor, or your doctor has retired and you’re having trouble getting medical treatment, you may get denied/cut off benefits as well. These sort of things happen all the time.

Pre-Existing Injury Exclusion: We do NOT pay benefits if your disability results directly or indirectly from a condition which existed on or before the date your coverage began. However, this limitation will not apply to you if:

  • you have been covered for Long-Term Disability with your employer for at least 13 weeks during which you have been actively working continuously (up to 3 days of absence does not count) and you have not been treated by a doctor, or any medical personnel under the direction of a doctor, for the condition or
  • you became totally disabled more than 12 months after your coverage began

Under this LTD policy, that 13 week period whereby you have been continuously working is crucial to your claim. A period of absence during that 13 week period may destroy your claim from ever getting off the ground.  The 1 year mark is also very important towards advancing the claim, and not getting caught in the pre-existing exclusion window such that the insurer can deny the claim. These so called “Pre-Ex” defenses can be very difficult to overcome when they present themselves.

Definition of Disability Under the Policy: 

  • During the Elimination Period and the following 24 months (this period is known as the own occupation period), you will be considered totally disabled while you are continuously unable due to an illness to do the essential duties of your own occupation, and
  • Afterwards, you will be considered totally disabled if you are continuously unable due to an illness to do any occupation for which you are or may become reasonably qualified by education, training or experience
  • Your Long Term Disability payments begin after you have been totally disabled for an uninterrupted period of 26 weeks or after the last day benefits are payable under any short-term disability, loss of income or other salary continuation plan, whichever is later.
  • This period, which MUST be completed before disability benefits become payable is the elimination period. mmdaf

What this means is that any claimant needs to wait 26 weeks (6 months) before they receive ANY LTD benefits. If you don’t have access to short term disability benefits, and don’t have much in terms of savings, this 6 month wait period (elimination period) can be very difficult from a financial perspective. You won’t get getting any benefits during that period of time because the policy says so, and there’s nothing which you, or the Court can do about it. These elimination periods are completely legal and legit.

The other eye opener to many of our clients is how the definition of disability works under these LTD policies. For the first two years, the definition of disability focuses on your “own occupation” at the time of the disability. So, if you worked at a factory on an assembly line, the definition of disability would take in to consideration whether or not you could return to the essential duties of your previous job.

After the two year mark, the definition of disability changes from your “own occupation” to “ANY OCCUPATION“. And it’s at that two year mark that many insurers drop the hammer and cut people off benefits and leave them out to dry without any recourse aside from contacting a lawyer and suing. This is a reminder from our previous commentary from our Toronto Injury Lawyer Blog Post that going the appeal route is only helping to pad the insurance company’s file. Contact a lawyer about your denied disability claim so that you don’t get hurt twice.


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