Important Terms for Long Term Disability and Other Important Factors to Consider

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For people fortunate enough to have a policy of long term disability (“LTD”) benefits, they will typically need to refer to the specific wording of their policy before knowing what steps they have to take and what rights they might have once their insurer has decided to cut off their benefits. 

Most LTD policies will have two important periods.  The first period is commonly referred to as the “own occupation” period.  Quite often, the own occupation period will last for the first two years of disability.  However, this might vary depending on a specific terms of one’s policy.  The second period is commonly referred to as the “any occupation period”.  The any occupation period begins at the end of the own occupation period and usually lasts until an individual turns 65 years old.

During the own occupation period, a person is typically required to prove that he or she is substantially unable to complete the necessary tasks of his or her employment, to receive a long term disability benefit.  During the any occupation period, a person is typically required to prove that he or she is substantially unable to complete the necessary tasks of any employment that he or she is reasonably suited for by skill, education and training, before that person can recover an LTD benefit. Many people find that they are approved for an LTD benefit during the own occupation period, only to have their benefits cut off by an insurer when the any occupation period begins.

LTD claimants should also be aware of their obligations under their LTD policy.  For example, many LTD policies will require an individual to apply for Canada Pension Plan disability benefits.  Very often, if a person recovers CPP disability benefits, these benefits will be deducted from the LTD benefit.  For example, if an individual is entitled to an LTD benefit of $900 per month but receives CPP disability benefits in the amount of $700 per month, then the LTD insurer will only pay the individual $200 per month.  Individuals should also be aware of whether their LTD benefit is a taxable or non-taxable benefit.