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Long Term Disability Cases in Ontario: The Math Matters!

Long Term Disability cases are unique in the world of personal injury law. For starters, they are contract cases (the policy of insurance). Every other case in the world of personal injury law is built on tort law. A dog bite, a slip and fall, a car accident case, an assault case, a product liability case. None of these cases are built on contracts. They are built on tort law. Yet, long term disability cases are predicated on the existence of a policy of insurance, and the wording contained therein.

The wording of those long term disability contracts isn’t written by your personal injury lawyer. Nor is it written by the claimant.

Rather, the wording contained in those long term disability policies is prepared by the long term disability companies themselves.

You would be naive to think that they are worded in such a way as to favour the long term disability claimant, as oppose to the long term disability insurer. Quite the contrary. Every word contained in those policies is there for a reason. The words are there to limit the insurer’s exposure and to maximize their recovery. The policies are drafted in such a way as to offer the least amount of money by way of benefits; while recovering the most amount in premiums.

That makes business sense. If you were running a long term disability insurance company, you would want to maximize your returns as well. A mantra of take in more than what you payout in claims leads to profits, which sits at the core to the existence of any for profit business. Insurance companies are in the business of making money. They are not charities.

So, why does the math matter for a long term disability claim?

The more money you were earning before your disability, the greater the monthly disability payment.

A factory worker who was earning $30,000/year would have a lower monthly disability amount than a banker who was earning $250,000/year before their disability.

The age of the disability claimant matters as well. Under the majority of long term disability policies, benefits run to the age of 65, and then stop. So if you are 64 years old and your claim is denied, you are fighting over a year worth of long term disability benefits. But, if you are 40 years old, you are fighting over 25 years worth of long term disability benefits.

Sources of income outside of the long term disability benefits need to be factored into the mathematical equation. If the disability claimant is receiving CPP Disability, or a disability pension from OMERS or from WSIB; those moneys are deducted dollar for dollar from the quantum of the long term disability benefit.

Take the example of a long term disability benefit valued at $2,500/month.

The claimant is also receiving $1,000/month in CPP Disability Benefits

The claimant is also receiving $500/month in an OMERS Disability Benefit

The claimant is also receiving $500/month in a WSIB Disability Benefit

In this example, the claimants $2,500/month benefit is reduced as such:

$2,500-$1,000-$500-$500 = $500linkedin-2-300x300

In this example, the quantum of the long term disability benefit which was originally $2,500/month is now just $500/month after the set offs are applied.

Can it get better? Yes it can, but it rarely does. That’s the cold hard truth which some personal injury lawyers are afraid to tell you because it’s not something you want to hear, but it’s something you need to hear so that you better understand how these cases work.

In some cases, there is an optional Cost of Living Allowance (“COLA“) protection on the policy. Cost of Living Allowances are the exception and not the rule. COLA is purchased as an additional rider on a policy. Think of it as an “add on” or an “extra” which comes at an extra cost to the base monthly premium. Most employers will opt for a cheaper policy which does not contain a COLA provision because it’s less expensive.

How a COLA provision works is that the monthly base line disability benefit will increase according to the cost of living each year. So, if there was indexed market inflation of 2.5% from the previous year, the COLA provision will provide that the monthly disability amount will increase by 2.5%. The COLA provision can cause the monthly disability amount to increase year over year, depending on the specific wording contained in the policy.

But these increases are nominal. That’s not to say that they are a bad thing. They can add up. But in the grand scheme, the set offs take away more money than what the COLA riders would provide.

Here is what can happen in a lot of long term disability claims. The younger you are, and the more that you earn, the more you will get paid in one of these cases.

The older that you are, and the less you were earning, the less you will get paid in these cases.

Some insurers are ruthless. They will terminate the long term disability benefits of a 64 year old who had been on claim for years, knowing that fighting over just 1 year of long term benefits is a big headache for a Plaintiff to do. Few lawyers will be eager to take on the case to fight over just 1 year of benefits. Few claimants will find the strength or the courage to retain a lawyer later on in their lives when the total value of their case is small.

That’s certainly not the case at Goldfinger Injury Lawyers where we are more than happy to take on that fight and take on that challenge. But you would be amazed at the amount of people who struggle to find the strength or courage to take on their insurance company for their cruel actions. It’s no coincidence that claimants have their benefits terminated so late in the lifespan of their claims knowing that some people won’t know what to do, or simply won’t want to put up a fight. With an Old Age Pension so close (age 65), it’s almost a dare to older claimants by insurers who play this sort of game. Rather than payout the lifetime of the policy (another year or a few months), they make the claimant jump through hoops right until the bitter end. It’s dehumanizing and offers absolutely no dignity to the claimant whatsoever.

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