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Things you should know about your Long Term Disability Policy

We received quite the response from a recent Toronto Injury Lawyer Blog post dealing with trends in long term disability claims. The response was so overwhelming, we thought that we would futher explore those new trends in long term disability law and policies, along with other things which you ought to know when advancing your claim.

The first thing which you should know about making a long term disability claim is that with the exception of a bad faith claim, a claim for mental distress, along with a punitive/aggravated damages; these claims are essentially claims for your BENEFITS. The amount of what those benefits are is defined by your policy of insurance. This means that if your policy sets out that your monthly disability benefit amount of 66.67% of your pre-disability net income (which amounts to lets say $2,100/month), then your monthly disability benefit is $2,100/month.

Understanding this is very important for disability claimants for the purpose of resolving your case because courts, judges, lawyers and insurers actually have to do the math!

Putting out an arbitray figure like $1,850,000 in a case where the monthly disability amount is $1,000/month ($12,000/year) for a 63 year old client whose benefits run out at the age of 65 simply makes no sense. In that example, the maximum disability amount, exclusive of any potential damages for bad faith, mental distress, or punitive or aggravated damages comes to just $24,000. So, suggesting a settlement figure of $1,850,000, while it would be fantastic, is not only unrealistic, but it will likely scare off the insurer from ever discussing a potential settlement with you for what otherwise might be a meritorious case ripe for settlement.

Keep in mind that in LTD cases, the LTD insurer did not intentionally cause the harm to render you to become disabled. It’s not like an agent for SunLife, Manulife, Great West Life or another big LTD insurer came along and hit you with their car or beat you over the head with a baseball bat. If they did cause that sort of intentional act, then we can call the police to get them charged, and then sue them for every penny they’re worth. But that’s not the case.

Your LTD benefits are confined to the four corners of your LTD policy. We cannot make up wording for your LTD policy in order to get you more money. We are governed by the policy. Some policies are great. Others aren’t so great.

Examples of NOT SO GREAT LTD policies we’ve seen:

-LTD benefits do NOT last until the age of 65. Rather, they only last for 2 years following the initial date of disability. Hence, those long term disability benefits you thought provided you security didn’t really provide you with the long term security you thought
– No claims can be made resulting from soft tissue injuries, mental or psychological injuries. This means that if you don’t break any bones, or have any objective injuries which show up on an x-ray, MRI, CT Scan etc., then chances are you will have a difficult time making a claim.

-No claims resulting from Cancer, HIV, AIDS, Parkinsons, Lupus, Arthritis, Chronic Pain, any diagnosed psychological disorder, brain injury, heart disease, or any sort of infectious. Under these policies, if you get really sick, or have contracted any from the list above, you’re not entitled to any benefits
-The definition of disability under the LTD policy is a very strict one such that if you’re able to perform ANY occupation, even for an hour a week, then you won’t be considered disabled under the policy
-If you’re approved for LTD benefits, those benefits are TAXABLE. That means that if you’re getting $1,000/month from your LTD insurer, you have to pay taxes on that benefit amont. There are many policies out there where the benefit is NOT taxable. That results in a net savings to you.

-LTD policies where there is a very long elimination period. In plain English, the “elimination period” is the period of time you need to wait until benefits can get paid. The longer the elimination period, the longer you will need to wait to start getting your money. Elimination periods are different for each policy.

-Nearly every policy we’ve seen requires that you participate in some sort of therapy, counselling or work hardening program if so requested by the insurer. Often, these work hardening programs are heaving skewed in favour of the insurer. The purpose of these programs is not only to get you back to work, but more importantly to justify the insurer’s denial. The insurer is essentially padding their file against you to support their decision to deny your benefits. Think of it as adding ammunition to the insurance company’s case against you.businessman_brick_layer.jpg

Some good things we’ve seen in LTD Policies:

-LTD benefits are not taxable. This amounts to a net gain to you.

-The definition of disability is that based on your ability to perform your “own” occupation throughout the life of the policy. In most policies, the definition of disability changes from “own” occupation to “any” occupation at the 2 year mark. So, if you were a bricklayer, your occupation is based on that of the heavily demanding job of a bricklayer over the first 2 years. After the first 2 years, the insurer then looks at your ability to perform “any” occupation. Any occupation means the most sedetive and easy job you can think of. Like working as a part time parking lot attendant or working in a toll booth for a couple hours a day. If you can do that job, then you’re not disabled. The better LTD policies we’ve seen stick to the “own” occupation definition of disability under the policy. These policies exist. But they cost more in premiums for you to pay. Speak with your insurance broker about it. Relying on yolur employer to provide this sort of security for you isn’t a good idea, no matter how good the employer.

-The new retirement age in Canada is 67. So why does your LTD coverage only provide for you up to the age of 65? The good policies we’ve seen have coverage up to the age of 67. Again, speak with your insurance broker about this to have the duration of benefits changed.

-Few exclusions clauses related to what constitutes a disability. There aren’t any soft tissue exclusions, or pre-disabilty exclusions to give the insurer the out they’re seeking to justify their denial of benefits.

Got questions about your policy? Ask around. Ask your co-workers, management, Union Reps, HR Staff or call a lawyer. It doesn’t hurt to ask so that you better understand what you’re entitled to. The worst is when people who are genuinely disabled attend at one of my offices only to find out that they have a terrible LTD policy which didn’t provide them the coverage which they initially thought it did.

I would like to swith gears now to my Toronto Injury Lawyer Blog Post of two weeks ago whereby I announced that the provincial government was making yet another change to car accident law in Ontario. I argued that these changes were brought about by the insistence of insurers and their powerful lobby. These changes were NEVER insisted or supported by the electorate. I invited anyone to email me personally at if they supported these upcoming changes to the SABS and the Insurnance Act. I did NOT receive a single email from anyone saying that they supported the changes. Instead, I received emails from people saying that they knew nothing about the changes, thanking me for bringing the notice of change to their attention, and letting me know that changes to car insurance were NOT their top priority. This again proves my point that your car insurance legistlation is crafted by, and tweeked by our government at the insistence of insurers.

Tha blog posting drew so much attention, that I was contacted by an accident victim support group called “FAIR ASSOCIATION OF VICTIMS FOR ACCIDENT LAW REFORM” thanking me for making the post. I can tell you that neither the Ontario Trial Lawyers Association, nor FAIR, nor ANYONE IN THE PUBLIC was every consulted with about the changes which are coming in to force on February 1, 2014. I would love to hear Kathlynn Wynne’s explanation as to why these changes were so important and why they were slipped under the rug without any consultation. Does consultation really matter? Not really. The government is just going to do what they want to protect their own interests. In this matter, I think it was a case of make this change, and you can expect a big donation from the insurance industry come election time in the spring. Whatever gets you back in power right?

Thanks to the good people at FAIR for getting in touch with my office and for their kind words. I encourage them to keep fighting the good fight on behalf of the little guy. Who knows. One day you reading this might be the little guy too! So, you’d better show some love and support for the people at FAIR.

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