For most Canadian employees, long term disability benefits replace a percentage of your pre‑disability income, usually around 60–70%, up to a maximum amount set out in your policy. The exact monthly benefit amount depends on your earnings, your specific long term disability insurance policy, and any other disability benefits that are deducted (like CPP‑D or WSIB).

How Long Term Disability Benefits Are Calculated

In Canada, long term disability benefits from an employer or private disability insurance policy are usually based on a percentage of your pre‑disability monthly salary.

Most long term disability plans work in three basic steps:

1. They look at your old pay and promise to cover about 60–70% of what you earned before you had to stop working, usually based on your regular salary only, not bonuses or overtime.​

2. They check the policy limit. Your monthly benefit cannot go over a set maximum (for example, $3,000–$6,000 per month), and that exact number depends on your plan.​

3. Your insurance company is allowed to subtract other money you get because of your disability. This can include CPP Disability (CPP‑D), workers’ compensation (WSIB), some employer paid sick leave or severance, and other disability income plans.

So, even if it says 60%, you may not receive that entire amount from the LTD insurer, because they often “top up” what you receive from other programs rather than paying the entire amount themselves.

Example of an LTD Payout

• Before you stopped working, you earned $5,000 per month in salary.

• Your long term disability policy promises to pay 60% of your income, up to a maximum of $3,000 per month.

• 60% of $5,000 is $3,000, so your gross monthly benefit from LTD is $3,000.

Now add in other disability benefits:

• You are approved for CPP Disability (CPP‑D) of $1,000 per month.

• Your insurance company is allowed to deduct that $1,000 from what they pay you.

So each month:

• CPP‑D pays you $1,000.

• Your LTD insurer pays you $2,000.

You still receive disability benefits totalling $3,000 per month, but the money comes from two different sources instead of just one.

Typical Long Term Disability Payouts in Canada

For many group plans in Canada, long term disability pays 60–70% of your regular income, up to the policy’s maximum amount. Some public data and insurer information confirm this range for standard employer plans.

If you are comparing programs and plans, our piece on what qualifies for long term disability gives more context.

Common patterns:

• Employer group insurance LTD:

  • 60–70% of base income

  • Coordinated with EI sickness, short‑term disability, and CPP‑D

  • Often payable after a 90–180‑day waiting period (also called the elimination period).

• Private LTD (for self employed or higher‑income professionals):

  • You choose how much coverage and your monthly premium is higher for larger benefits and longer coverage.

Factors That Can Impact Your LTD Payment

Your long term disability benefits can end up higher or lower than you expect. The amount you actually receive depends on your policy formula, caps, other disability benefits that are deducted, tax rules, and how your policy defines total disability over time.

1. How your policy does the math

• Each plan promises a different percentage of your old pay (for example 50%, 60%, or 66.7%).​

• Some plans use only your base salary. Others may include steady commissions, but not bonuses or overtime.​

2. Limits and minimum amounts

• Many plans have a hard cap, such as $3,000 or $5,000 per month, even if the percentage would work out higher.​

• Some policies also promise a small minimum payment, even when other benefits are deducted.​

3. Other benefits that are deducted

• Your insurance company can often subtract CPP Disability (CPP‑D), WSIB, other group disability income plans, and sometimes part‑time work income from your LTD payment.​

4. Whether your LTD is taxed

• If your employer paid the LTD premiums, then your disability benefits are usually taxable.

• If you paid the premiums yourself with after‑tax money, your LTD monthly benefit amount is usually tax‑free.

5. How your policy defines “total disability”

• For the first part of a claim, many policies look at whether or not you can do your own occupation.​

• After about 24 months, many switch to an “any occupation” test, which can give the insurer an excuse to cut off your benefits if they say you could do some other type of work.​ This period is called the Change of Definition.

Steps to Maximize Your Long Term Disability Claim

You can’t change the formula in your long term disability insurance policy, but you can improve your chances of receiving the maximum amount you’re entitled to.

1. Understand your coverage early

   • Get a copy of your LTD booklet and confirm: your replacement %, cap, elimination period, qualifying period, offsets, and when benefits end (often at 65). ​

   • Check if the plan is employer paid or employee‑paid for tax purposes. ​

2. Stop work at the right time

   • Don’t quietly reduce your hours long‑term; doing so can reduce your future LTD monthly benefit because it’s tied to actual income at the time of disability. ​

3. Build strong medical evidence

   • See your doctor regularly, follow treatment, and ask them to clearly connect your symptoms to your inability to perform the essential duties of your job. ​

   • Keep a symptom and functional journal that shows why you meet your policy’s test for total disability. ​

4. Coordinate EI, STD, and LTD

   • Plan for the waiting period between sick leave, EI sickness, short‑term, and LTD so there’s as little income gap as possible. ​

5. Get legal advice if cut off or underpaid

   • If your insurance company stops or reduces payments, a disability lawyer can challenge the decision and seek back pay or a lump‑sum settlement.

   • See Share Lawyers’ LTD services page to understand how they fight for full benefits.

Can Canadian LTD Payments Be Taxed?

In Canada, receiving benefits may be taxable; it depends mainly on who paid for the disability insurance.

• If your employer paid all or part of the LTD monthly premium, your LTD payments are usually treated as taxable income. The insurance company may take tax off your cheque, or you may owe tax when you file your return.

• If you paid 100% of the premiums yourself using after‑tax money, the monthly benefit amount you get from LTD is usually tax‑free. You still pay tax on other taxable disability benefits like CPP Disability (CPP‑D), but not on the LTD portion.

A quick way to check is to ask HR or your plan administrator: “Did I pay my LTD premiums myself with after‑tax dollars, or were they employer paid?” The answer usually tells you if your receiving disability benefits will be taxable or not.

CPP‑D, WSIB and other government disability benefits have their own tax rules, so get tax advice or review CRA guidance. ​

Hypothetical story: MinJoo’s LTD payments

MinJoo is an ER nurse in Brockville who injured her back lifting a patient and can’t safely continue full‑time hospital work.

MinJoo earned $6,000 in gross monthly salary as an ER nurse. Her hospital employer provided group long term disability insurance that promises 66.7% of her income, up to a cap of $4,000 per month, with a 120‑day elimination period.​

Once her sick leave and EI sickness ended and she was approved for LTD, the insurer did the math:

• They started with 66.7% of $6,000, which is about $4,000.

• Because her policy’s maximum amount is $4,000, that becomes her gross monthly benefit from LTD.​

Her insurance company then required her to apply for CPP Disability (CPP‑D). She was approved for $1,100 per month. Under her policy, the insurer can deduct that amount:​

• Total disability benefits promised each month: $4,000.

• CPP‑D pays $1,100.

• The LTD insurer pays the rest: $2,900.

MinJoo still received disability benefits totalling $4,000 every month, but the money came partly from CPP‑D and partly from her insurance provider, instead of one single source.

When her policy’s definition of term disability changed after 24 months, the insurer tried to say she can do “any occupation,” but her symptoms and functional limits still prevented her from sustaining full‑time work.

With help from a disability lawyer, she proved she remains totally disabled under the policy and will keep her long term disability benefits until age 65.

In most cases, how much long term disability pays in Canada comes down to a percentage of your pre‑disability income, set caps, and how your policy treats other disability benefits like CPP‑D and WSIB. To protect your monthly benefit, you need strong medical evidence, careful timing around work and sick leave, and, if necessary, legal help when your insurance company underpays or stops your payments.

Contact Share Lawyers today and let our experience work for you. Our 40 years of experience can help you win your case against Canada Life, Desjardins, Manulife, RBC Insurance, Sun Life, and other insurance companies. Our legal team offers a free consultation and works on a contingency basis—there are no fees unless you win your case.

Frequently Asked Questions

How Much Can I Get for a Long Term Disability Claim in Canada?

Most Ontario group long term disability plans pay about 60–70% of your pre‑disability income, subject to a maximum amount and less any offsets like CPP‑D or WSIB. The real number is your net after tax and after those deductions, which is why two people with the same salary can still receive different disability benefits.

For more detail on Ontario LTD eligibility and benefits, see Share Lawyers’ “What Are My Long Term Disability Benefits?” and “Are You Eligible for Long Term Disability Benefits in Ontario?” articles. ​

Is It Possible to Challenge My Long Term Disability Payment?

Yes. If you believe your monthly benefit is miscalculated or your long term disability benefits have been reduced unfairly, you can challenge the decision and seek a higher amount or back pay. Disability lawyers routinely dispute offsets, incorrect salary figures, and early terminations on behalf of clients.

Share Lawyers’ pages on denied LTD benefits and “What to Expect from a Long Term Disability Lawsuit in Canada” explain how they negotiate or sue to correct payments. ​

How Long Does It Usually Take to Get Your First Cheque From Your LTD Insurance Provider?

Once you satisfy the LTD waiting period (often 90–180 days from when you stop work), the insurer needs time to assess your claim, which can range from a few weeks to many months. Some claims are decided in under three months after the elimination period, but delays of six months or more are common if the insurance company keeps asking for more information. ​

If it’s been more than six months since you applied and you’re still not receiving benefits, get legal advice promptly. ​

How Long Can I Receive LTD Benefits in Canada?

Many long term disability insurance policies pay until age 65 if you continue to meet the definition of total disability, though some end earlier or later. In practice, benefits end earlier if the insurer decides you no longer qualify under the “any occupation” test after about 24 months or if you return to work.

It’s important to review the Change of Definition section in your policy and talk to a lawyer before that date if you’re worried about being cut off. ​