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When your Long Term Disability Insurance isn’t Long Enough (Ontario)

Long Term Disability insurance isn’t easy to understand. It’s not a common tort or a common cause of action.

It’s not an intentional act which causes harm, or a negligent act by an individual defendant which causes harm. That means it’s not easy for many people to understand.

Here’s a concept that’s easy for people to understand:

A Red Honda Civic runs a red light and t-bones a Blue Cadillac. The driver of the Red Honda Civic which ran the red light is charged and convicted for his bad driving. The passengers in the Blue Cadillac are all seriously injured in the car accident. The innocent accident victims in the Blue Cadillac sue the at fault driver of the Red Honda Civic.

In this very brief fact pattern, we have liability (the driver of the Red Honda Civic is at fault), and we also have damages and causation (the passengers of the Blue Cadillac got injured; and those injuries were a direct result of the negligence of the Red Honda Civic driver). The personal injury case against the at fault driver of the Red Honda Civic is clear and easy to understand.  This case is built in tort and based on negligence.

These concepts are relatively easy (in comparison to other causes of action) to understand.

Long Term Disability cases are different. Very different.

These cases are not based upon negligence. They are contractual cases based on the policy of insurance between the policy holder and the insurer. Sometimes the insurance company is only administering the plan on behalf of the employer, so there are multiple parties and dynamics at play.

Because these cases are contractual cases, the details and terms contained in the policy are very important towards determining entitlement for long term disability benefits under the policy.

If the policy says that the claimant is excluded from receiving long term disability benefits if the disability is based upon a psychological condition; then the claimant will NOT BE ELIGIBLE for long term disability benefits if  they cannot return to work on account of depression, anxiety, stress, PTSD etc. No matter how bad the psychological condition, if the policy says that disability cannot be based upon psychological injury, the claim won’t succeed.0001r_Goldfinger-200x300

This seems unfair.

And it is. But it wasn’t you who drafted the policy to begin with. It was the insurance company with the help of actuaries, lawyers, policy writers and an entire army of other people with decades of experience in the insurance industry. And it’s because your policy is based on words, clauses and terms which is why the words, clauses and terms contained in your long term disability insurance policy matter.

And boy do they matter!

Here’s an example that gets everyone’s blood boiling.

You work at an office job for a small to mid size software company. You’ve been working there for over a decade and planned on working well beyond the age of 65 because retirement is tough. Stats show that Canadians are working much more later in life because they have to in order to make ends meet. Why would be any different. It’s a good job which paid well and you have no reason to stop working at 65.

Unfortunately, you ran in to a significant health issue which has kept you from working for a prolonged period of time. Your doctors tell you that you should apply for Long Term Disability and CPP Disability because their prognosis for your return to work is doubtful-guarded.

In applying for Long Term Disability Insurance through a company like Great West Life, Manulife, SunLife, Industrial Alliance, Desjardins, Co-Operators, RBC Insurance, Canada Life etc. you find out one of two things which upset you:

  1. Benefits only go up to the age of 65 and not longer despite the fact you would have worked at the same job, earning the same or greater pay, well beyond 65
  2. Long Term Disability benefits are paid out for a maximum of 5 years, or up to the age of 65; whatever period comes first

This is an example our long term disability lawyers have seen before. It’s not made up. It’s a real life example which happens to more people that you would expect. In this fact pattern, those long term disability benefits were simply not long enough. Your employer cheaped out on the duration of benefits to save costs from their bottom line at your expense. The net result is that you, the injured/disabled employee who thought they had adequate coverage get “screwed” for lack of a better term.

What can you do to prevent this from happening to you?

Unfortunately, you can’t change the terms of a long term disability policy. You can certainly talk with your boss about getting a new policy to better protect employees, but chances are this won’t happen or you’ll just anger you’re employer.

You can certainly purchase your own individual policy of long term disability insurance which has more favourable terms. This means that you can shop around for the best long term disability insurance to fit your individual needs. If you’re looking for a Cost of Living Allowance Rider, an Own Occupation Rider, or a Return of Premium Rider, all of these may be available to you to customize your long term disability insurance needs. A certified/registered insurance broker can better explain to you the ins and outs of a long term disability policy, and what policy/provider will best suit your needs. If you have questions about how your long term disability policy works, you can ask your broker, union rep, HR rep, or a customer service rep (not a claims rep) from the insurance company may also be able to assist you.

If you don’t have your own individual long term disability policy, then you’re at the mercy of your employer and the terms provided under the group policy of insurance. These terms, along with the insurance provider may change from month to month or year to year. You have no say, or limited say in terms of what you get out of the long term disability policy. The end result might be that your long term disability insurance isn’t as long or as comprehensive as you need it to be.


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