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Long Term Disability Claims: How LTD policies can work against you

Our law firm litigates countless Long Term Disability (LTD) claims against large, multi-national insurers such as Great West Life, Sun Life, Manulife, Industrial Alliance, Desjardins, SSQ, Canada Life, Empire Life, RBC Insurance, Co-Operators, Equitable Life and the list goes on.

Litigating these claims can prove to be difficult for a variety of reasons.

It’s important for all claimants to understand that these claims are based on what the policy says. In our office, we refer to this concept as the four corners of the insurance policy.

There are certainly ways around these four corners, along with way at tackling damages for LTD claims which are outside of the scope of the police such as punitive, aggravated and damages for mental distress. But these topic will not be covered in this edition of the Toronto Injury Lawyer Blog Post.

For now, we are going to focus on damages under the LTD policy.

The policy will define what the monthly LTD benefit amount is; how long benefits will be paid for; when those benefits will begin to be paid; what medico/legal definition a Plaintiff must meet in order to be considered disabled under the policy; what injuries are and aren’t covered under the policy; and what exclusions would limit recover under the policy.

Plaintiffs/Claimants don’t write their policy. Insurance companies do. Accordingly; many provisions contained in long term disability policies aren’t there to protect claimants. Rather, they are there to protect the insurer’s interests so as to mitigate their damages and minimize any potential pay out.

Example: A worker at a factory has an LTD policy with a large insurer through their employment. The worker injures his back such that he cannot return to work in any sort of gainful capacity. The worker thinks that he’s covered up to the age of 65; because that’s how he thinks his policy works.

Upon reading the fine print, the worker and his lawyer find out that the duration for which long term disability benefits are paid is up to the age of 65; OR 5 years; whatever period comes first! 

The worker thought he would be covered up to the age of 65. Instead he learns that he will only have access to 5 years worth of benefits. This may sound like a long period of time, but it’s really not. Particularly for a young worker age 40 with no transferable skills who will never be able to work at a manual labour job for the rest of his life.

Example #2: An office worker develops extreme anxiety and depression. She has been working at the same office for over 20 years. Her doctors tell her that she cannot return to work on account of the anxiety and depression. She has access to LTD benefits and applies. Under the terms of the LTD policy, only PHYSICAL injuries are covered. The policy will not pay out a benefit for psychological injuries. Such injuries are excluded under the policy.

Example #3: A call centre employee has access to LTD benefits through work. They hurt themselves on the job lifting a box of paper on the job. The back injury, as innocent as it sounded; turns out to be fairly severe. The claimant believes that they’re entitled to a monthly benefit of $2,500/month under their LTD policy through work. Upon reading the policy, it turns out that there is a specific formula in calculating the monthly LTD benefit. The formula is based on 66.7% of the net pre-disability income of the claimant, going back two years. The claimant’s job is part time, and they earn $1,750 net per month. Based on the LTD benefit formula, the disabled employee’s monthly benefit amount is $1,167.25/month. They were expecting to be eligible for $2,500/month.

In all of these examples, the claimant thought they were covered, and entitled to MORE than they actually were. Part of this is nobody ever really reads or understands their LTD policy until they need to make a claim on it.

Our lawyers have seen scenarios whereby long term employees have started working under one policy of insurance. Years later, the employer changes benefit providers and in so doing; changes their employees benefit policies to another insurer. The new policy provisions turn out to be not as generous as the policy provisions under the old policy.Petes

At the end of the day, you get what you pay for. There are some very good policies out there for claimants. The premiums under these policies will be more expensive that the premiums for more restrictive policies.

One of the interesting trends we have seen, aside from insurers playing around with the definition of disability and the duration of those benefits; is that Ontarians are working LONGER. Yet, employer LTD policies aren’t reflecting that. People are living LONGER, and accordingly, need more income to fund their retirement plans. The result is that they want to work longer. Most, if not all LTD policies don’t reflect these changing trends in the workplace. These policies continue to go up the to age of 65, and not 67 or beyond. If you live to the age of 85; that’s 20 years without any income coming in aside from perhaps an old age pension. That’s a lot of saving to do for those golden years.

Any way to change that? Perhaps. Speak with your employer or your LTD insurer to see if they will insure you beyond the limits of your current policy. I imagine that they will provided you pay an additional premium. And so long as you have them on the phone, see what they can do about eliminating some of the restrictions under your own policy. If it’s a policy through your employer, it might be difficult to make such add ons or changes to your policy because these are considered “group policies” of insurance. Your employer likely negotiated a special group rate in order to get a discount. It might be hard to get out of, or change that group policy to get more of an individualized policy.

We recommend having you very OWN policy of LTD insurance which will follow you from employer, to employer; regardless of where you work. These policies can be catered specifically to your needs and income level. You can pay as much in premiums, or as little in premiums as you can manage. The nice thing about these individual policies is that they’re catered to you; and change or don’t change based on your terms. You keep control over your own policy instead of relying on your employer or union to look out for your best interests.

Enough law talk? Sure. Today marks April Fool’s Day. I got fooled at the office with an internal office prank, which I didn’t find very funny at the moment; but certainly made me chuckle hours later. We are rooting hard for the Peterborough Petes as they trail the Oshawa Generals 2 games to 1 in the opening round of the OHL playoffs. Early observations from the series:

1) Oshawa has A LOT of size. The Peterborough players look tiny in comparison

2) Oshawa has a number of highly skilled players who will play and go on to have meaningful careers in the NHL. I can’t say the same for the Peterborough roster

3) Oshawa has a gorgeous area. I’ve been there in person on a number of occassions and they didn’t spare any expense. The Peterborough Memorial Centre has loads of charm and character, but needs significant renovations to keep up with the times

4) I don’t like the Peterborough Black or Cream uniforms. Never have. Stick with the Maroon and White. That’s the ticket. There isn’t a more noticeable jersey in the OHL aside from perhaps the barber pole striped pattern of the Ottawa 67’s

Until next week. #GoPetesGo #StrengthInNumbers

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