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Long Term Disability? It all starts with the Policy

Long Term Disability cases are at their essence, contract cases.

In a long term disability case, there is a contract of insurance between the Plaintiff and the Defendant. The contract is between the Defendant insurance company (Great West Life, Canada Life, Manulife, Sun Life, Empire Life, Desjardins Insurance, SSQ Insurance, Co-Operators Insurance, RBC Insurance, La Capitale Insurance etc.) and the Plaintiff policy holder.

A car accident case for pain and suffering or a dog bite case is very different because there is no contract between the Plaintiff accident victim and the at fault party. These are straight tort cases. Accident benefit cases for first party insurance are certainly different, but the legal principal is the same given that the cause of action for tort cases is not contractural. In both car accident and dog bite cases the cause of action is in negligence against the at fault party.

The policy holder can be a company which covers all of its employees (a group policy through your employer), or it can be an individual policy of insurance.

In the case of an individual policy of insurance, the policy holder goes out and purchases the insurance on their own either directly through the insurance company, or through an insurance broker. The insurance broker may sell a variety of different policies underwritten by a variety of different companies. Variety is the spice of life, so getting options to purchase your insurance is a good thing. That way the consumer can compare and contrast prices, definitions, exclusions and benefits between polices. Having a good and knowledgable insurance broker is very helpful when comparing and contrasting long term disability policies.

Having policy which contains favourable wording to address your needs is key

Many long term disability claims fail before they even have the chance to get started. The reason for this is people often don’t know what they’re buying into when they first purchase their policies. People don’t read or understand what their signing up for. A cheap policy may not be the best option for you. A cheap policy will often contain wording or clauses which make recovery under the policy almost impossible. A cheap policy will also contain clauses which don’t extend the disability benefits for the duration you expected, or for the amount which you expected either.

Below is an exclusion clause that our long term disability lawyers have thrown into many of these “cheaper” and less friendly policies. Take a careful read and think long and hard about it. Would you want to pay money for a long term disability policy which contains such a clause?linkedin-2-300x300


Benefits are not payable or provided under this Policy, and no premiums will be waived,
for any portion of any period of Disability, nor for any other loss covered under this
Policy, that results, directly or indirectly, from:

12) Subjective Conditions: including, but not limited to, chronic fatigue syndrome, chronic
pain syndrome, fibromyalgia, Epstein Barr syndrome or any other subjective syndrome
or condition;

Back Strain is considered a Soft Tissue Injury, and is excluded under the Policy

The condition of  Degenerative Disc Disease, Facet Osteoarthritis and tendonitis are considered an Illness
not an Injury. Illness is expressly excluded under the Policy, unless the optional Illness rider is purchased. Disability for an Illness will only be covered for a maximum of 220 days or until the Illness has subsided, whatever comes first. 

Your long term disability lawyer can only work so much magic to get your claim approved. But your long term disability lawyer cannot make this clause disappear if it’s contained in your policy. If you have a back injury, or a soft tissue injury or any sort of subjective injury, your claim will be denied at first instance and winning a case gains your long term disability insurer will prove to be very difficult. The long term disability insurer has the law on their side in the form of the wording of the contract which you signed up for.

Suing the insurance broker who sold you a policy containing a clause like this is a different story. Chances are you will have more success in the broker’s negligence or breach of fiduciary duty claim against the insurance broker than you would against the insurance company.

These sort of brokers negligence claims are not uncommon. We also see them frequently in the fields of mortgage disability insurance where banker or mortgage brokers are selling policies of insurance concurrently with arranging mortgages. The last thing the mortgagee is thinking about is what the wording of the mortgage disability policy says. Top of mind will be how much the mortgage rates are, how much the monthly mortgage payment will be and the duration of the mortgage before the rates change. Disability insurance in those cases after thoughts and sold as value added for the mortgage.

If you have a manual labour job, or have a very physically demanding position, having a long term disability policy is important. But having the right policy is even more important. Having a policy for the sake of having a policy is throwing your hard earned money down the drain.

I have seen some job sites which require their workers/contractors to have their own disability insurance because they aren’t paying for WSIB (Worker’s Compensation) premiums. Instead, as a pre-condition to work on site, you need to certify that you have your own disability insurance. It happens more than you would think. But in those situations, don’t cheap out on a policy you could never hope to collect upon. You are setting yourself up for failure and certainly not protecting your health, your rights or your livelihood.

Before purchasing your own policy of long term disability insurance, some questions you may want to ask include:

  • How much are the benefits under the policy?
  • What percentage of my income will be paid as a benefit?
  • How long do the long term disability benefits run?
  • Are the benefits taxable?
  • Is there a Cost of Living Allowance for the benefits?
  • What is the definition of disability under the policy and does that definition change over time? How so?
  • What are the exclusions under the policy for disability? Think long and hard about what theses exclusions are and if they will meet your healthcare needs. Having a disability for an “illness”, back injury, a psychological injury or a “subjective injury” is not very helpful as the majority of long term disabilities fit in to these categories.


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