If you have applied for Long Term Disability Benefits with a private LTD insurer such as SunLife, Manulife, Great West Life, Industrial Alliance, SSQ, Co-Operators, Empire Life, RBC Insurance, La Capitale Insurance, BMO Insurance; and had your claim denied, then this is the article you need to read.
It’s important to know that in order to recover a Long Term Disability Benefit from one of these insurers, you first need to APPLY for it. Just sitting around and waiting for a cheque to roll in is a pipe dream. Insurers won’t pay a benefit, unless you’ve taken the time to complete the paper work (properly), and then submit it.
If don’t apply for the LTD benefit, I can assure you that you won’t get approved.
If you wait too long to apply for the LTD benefit, I can assure you that your claim will get denied for delay. Many LTD policies contain clauses that the LTD benefit must be applied for within a certain period of time. Failure to make a timely application is grounds for an LTD insurer to deny your claim. If you take the time to read the fine print of your Long Term Disability Policy, you will see plenty of clauses which are drafted in favour of the large, deep pocketed insurer, instead of in the favour of the individual policy holder (a person like you and me).
None of this seems fair; but it isn’t intended to be fair. Keep in mind; an insurance policy is a product designed by an insurer to make money. If these policies weren’t profitable, I can assure you that insurers would not put them out there for the public to buy.
Just because your LTD policy provides for a monthly benefit of “X“, doesn’t mean that you’ll receive said amount.
Most, if not all LTD policies our lawyers have seen contain various set off clauses. These clauses come as an unpleasant surprise to many LTD claimants.
People think they’re entitled to a certain amount. But, when push comes to shove and they read the find print of the LTD policy; it turns out that they’re entitled to much less per month.
Take this “set off” example from a standard Long Term Disability Policy:
Reduction of Benefit Payments
The monthly indemnity benefit will be reduced, after the application of the monthly maximum amount, by any disability benefits which are payable or which would have been payable to the participant had a satisfactory application been made under:
a) The Canada Pension Plan, excluding benefits payable on behalf of dependent children;
b) a worker’s compensation act;
c) a provincial auto insurance law (Ontario Accident Benefits after a car accident?!?)
d) a provincial crime victims compensation act (Criminal Injuries Compensation Board)
Moreover, the amount of the monthly disability income benefit payable by the insurer will be adjusted so that the sum of all income, compensation, indemnity and benefits which the participant would or could receive…will not exceed the overall monthly benefit maximum under the LTD Policy of Insurance.
So, what this means is if you’re monthly LTD Maximum Benefit is $3,000/month, but CPP started paying you $1,000 per month, that doesn’t mean that you will start getting $4,000 per month ($3,000LTD + $1,000CPP = $4,000). That would exceed the monthly LTD maximum payable under the policy which is forbidden.
What this means is that the LTD Insurer gets what essentially amounts to a dollar for dollar set off for every dollar paid by CPP. You will still get $3,000/month; only your LTD insurer now only has to pay $2,000, because you’re also getting $1,000/month from CPP. This amounts to a huge savings for the LTD insurer. $1,000/month = $12,000/year = $60,000 over 5 years. These set offs mount up quickly in favour of these insurers.
Our lawyers can tell you that 10/10 of our clients aren’t aware of these set off provisions contained in their respective policies, until somebody alerts them to these provisions.
Taking it one step further, people often believe that at trial, a Judge can order that an insurer pay their monthly LTD benefits until the age of 65 (or when the policy expires).
This is a common misconception.
A Judge CANNOT declare that an insurer pay you for benefits in to the future. They just can’t.
What happens if you die the day after Judgment? It’s not fair for an insurer to pay for years of future benefits to a dead person.
What happens if you magically get better and return to work the day after your trial is over? Again, that’s not fair for an insurer to pay for disability benefits in to the future for somebody who is no longer disabled.
The only thing a Judge can do is order that the insurer pay what’s yours: the arrears, plus interest; plus make a declaration that the insurer put you back on claim so that you receive benefits on a monthly basis.
The Judge can also order that the insurer pay damages for mental distress, aggravated damages, punitive damages and damages for your financial hardship and debts accrued on account of the denial. Judges makes such orders in exceptional cases. While I would like to tell you that such damages are routinely ordered, the reality is that they are not.
Once a Judge has ordered that an insurer put you back on claim for monthly benefits, the insurer has the power to start the entire process over again! They can then start, or re-start surveillance on you and find reasons to cut you off. They can ask that you doctor complete more medical forms and find a reason to cut you off. They can demand that you attend a medical assessment with one of their “experts” and cut you off. Once you’ve been cut off, you will need to go back to your Long Term Disability Lawyer and start the who case all over again.
This is why in most Long Term Disability cases we see, insurers and clients like to settle cases on a full and final basis. This provides a lump sum settlement for the client, and allows the insurer to close their books and move on to the next case. When it works out, it’s a win-win for both parties. The insurer will feel like they’re paying too much for the claim. The claimant will feel like they’re accepting too little. Everyone is unhappy. That’s usually the sign of a good deal (everyone’s pleasantly unhappy).