The ABCs of LTDs: Breaking down the Basics about Long-Term Disability

In the event of an injury or illness where you are not able to return to work, long-term disability insurance offers some protection by providing you with a portion of your income that can go towards keeping things financially afloat. It is there to offset any financial hardship you might suffer as a result of being unable to return to work due to a medical condition.

Most policies provide benefits for the first 2 years if you’re unable to meet the requirements for performing your own occupation. However, after 2 years, you must be unable to perform the tasks required by any occupation for which you are reasonably qualified by education, training or experience in order to retain long-term disability benefits. 

The Difference between Short-Term Disability & Long-Term Disability Insurance:

Short-term disability insurance can provide you with replacement wages in the event that you are temporarily unable to work. This can apply to instances where you may be ill/disabled for a few weeks. Short-term disability insurance only covers income replacement for the first 120 days.

In contrast, long-term disability insurance provides a more permanent income replacement if your medical condition prevents you from working over a longer period of time. It is a form of protection in the event that an illness or disability leaves you totally or completely unable to return to work. It provides you with a portion of your income that can go towards living expenses which may also include medical treatment and rehabilitation. For the first 2 years if you are unable to meet the requirements of performing your own occupation then you are eligible.



After 2 years, you must be unable to perform the tasks required by any occupation for which you are reasonably qualified, or could become qualified for, by reason of education, training or experience, in order to retain long-term disability benefits.

It is important to note that disability benefits are different from workplace insurance benefits , as disability benefits arise from an illness or injury which is not required to occur on the job, whereas workplace compensation benefits are given as a result of being in the course of your employment.

Who pays for long-term disability coverage?

Long-term disability insurance can be purchased privately by individuals through an insurance broker or directly through an insurance company. Long-term disability insurance can also be made available for purchase through your employer through a group disability insurance policy . In cases of group insurance through your employer, the insurance premiums could be paid by the employer, the employee or shared between the employer and the employee. Depending on what applies to you, there are different implications for tax purposes.

If the employee pays premium for the long-term disability insurance, then disability payments are not taxable . If the employer pays for the disability premiums, then the payments made to the disabled employee are taxable .

What type of disability qualifies for long-term disability benefits?

Most long-term disability policies cover you regardless of the severity or type of illness or injury you are suffering from that prevents you from working. However, some policies exclude certain illnesses, and others may exclude injuries or illnesses which are compensable under a Workplace Safety Insurance Board claim, if it is available through your workplace.

The rule of thumb is, if you are not able to do all or substantially all of the tasks required by your current job then you will qualify for long-term disability benefits. The threshold is that your disability prevents you from being able to work.

However, depending on your policy, it may state that in order to qualify for the disability benefits, you must prove that it is not only your job that you are unable to do, but any job that you may be qualified to do . This varies from policy to policy, so read the terms of your policy.

Will I have to file a claim in order to receive long-term disability benefits?

If you want to receive long-term disability benefits, then yes, it is required that you file a claim. If you are receiving coverage from your employer, contact your company for instructions on how to file your claim. Otherwise, contact your insurance provider. You will be required to fill out a claims form which will be provided to you by your employer or your insurance company.

Are there deadlines when making a claim for long-term disability insurance benefits?

Yes, there are deadlines or time limitations which can affect your ability to assert your claim. Don’t delay in contacting a disability insurance lawyer who will guide you through the process and notify you of any deadlines .

What if my employer terminates my employment while I am on long-term disability? What will happen to my long-term disability entitlement?

As long as you were actively employed at the time you became disabled then your termination of employment should not affect your long-term disability entitlement . However, any termination and/or severance payments may be deducted from your long-term disability entitlement.

After being unable to work at my own job for two years, can my insurance company stop paying me my benefits?

For most policies, you’re entitled to claim long-term disability benefits for the first 2 years of being unable to perform the essential duties of your own job. This is called the “Own Occupation Test”. After the 2-year period, your eligibility for long-term disability may change. It will then be based on whether you are unable to perform any occupation for which you are reasonably qualified, or could become qualified for, by taking into consideration education, training or experience. This is called the “Any Occupation Test”.

Why has my long-term disability claim been denied/terminated?

You may be denied for a variety of reasons, which may be as simple as filing all of the necessary paperwork and documentation. Other reasons may be more complex and will require the assistance of a lawyer to help you in your claim to get the benefits that you are entitled to .

Issues may arise if you’re not examined by insurance company approved doctors, you exceeded the time limitation in submitting a claim, there was a misrepresentation on the application as you had a pre-existing condition that you did not mention, there is surveillance evidence that contradicts your claim, a failure to have your injury or condition properly documented by your physician, you have not ‘mitigated your losses’ by maintaining your treatment regimen.

When I sue the insurance company for disability benefits, what do I sue for?

You are suing for the payment of the disability benefits to which you’re entitled. If you and your lawyer decide that the insurance company acted unfairly when they denied your claim, you may also sue for “bad faith”. Your lawyer will also make a claim for pre- and post-judgment interest on the amounts claimed along with a financial contribution from the defendants which will go towards your legal fees.

If you are disabled and cannot continue to work due to your disability, and have been denied the benefits to which you’re entitled, it is important to have an experienced and diligent lawyer by your side, representing you. At Noohi Law, we pride ourselves on our exceptional client service, thorough knowledge of the law, and innovative solutions.

Contact us today with your long-term disability inquiries at 416-907-7364 ext 1 or at [email protected] .