In this article, we answer the question: what is long-term disability in Canada?
By the end, you should have a good understanding of what these benefits are, and if you might be eligible for them.
For more information, check out our Guide to Long-term Disability for 2021.
What is long-term disability?
Long-term disability is a type of income replacement benefit. Basically, when we talk about long-term disability, we are talking about monthly payments that you can receive for a permanent disability. This disability must make you incapable of working for an extended period of time.
Not everyone is entitled to these benefits, however. They’re only for members of a plan or policy that offers them.
There are 2 types of plans that offer these benefits: group insurance and individual insurance.
Group insurance plans are typically offered by your workplace. So, you are eligible because your employer offers you the plan.
Individual policies are ones that you buy from an insurance broker yourself. Usually, self-employed business people or professionals will purchase these policies.
To receive long-term disability benefits, you have to apply by filling out the standard paperwork. There is an application, a form done by your employer, and a medical report. Once you submit those, the insurance company reviews them and makes a decision. There is no guaranteed that your claim will be approved, however. They decide claims on a case-by-case
If they approve your claim, then you receive monthly payments. Your specific plan determines how much you get paid.
Group insurance policies usually pay a percentage of your gross or net income. This percentage is normally between 50-75%. However, a fixed payment amount is more common with individual insurance plans. For example, your payment might be $5000 per month.
Don’t assume that your benefits will last until age 65. A lot of them do, but not all of them. You really have to check your policy to find out exactly how long you can receive long-term disability benefits.
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