Long Term Disability: Indexed vs Non-Indexed

For individuals currently or soon-to-be on long term disability, you need to understand the differences between indexed and non-indexed policies because these distinctions can significantly impact your financial security and peace of mind throughout the duration of your benefits.

Want to learn more about long term disability: indexed vs non-indexed? Share Lawyers’ experienced long-term disability lawyers can help you understand your options.

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Long Term Disability Indexed vs Non-Indexed

For a while, inflation in Canada remained very low. As a result, whether disability benefits had provisions for adjusting the benefit amount to keep up with inflation wasn't a concern for most. However, recent inflation rates have surged to levels not witnessed for decades, prompting heightened concern over the potential for LTD benefits to increase over time.

Long term disability benefits come in two flavors, indexed and non-indexed.

Indexed Benefits

Indexed LTD benefits are adjusted periodically to account for inflation or changes in the cost of living. The benefit amounts increase over time to maintain purchasing power, ensuring recipients are not negatively affected by rising prices.

Indexed benefits safeguard against inflation by being tied to the Consumer Price Index (CPI) and adjusted annually, typically on the anniversary of initiating LTD benefits.

These adjustments are subject to maximum and minimum limits outlined in the policy. For instance, if the CPI indicates a 5% increase and the policy sets a minimum adjustment of 2% and a maximum of 10%, your benefits would rise by 5%. The calculation method—whether it's based on the original benefit amount or the prior adjustment—depends on your policy's wording.

Indexed benefit policies generally have higher premiums but offer greater financial security overall.

Non-Indexed Benefits

Conversely, non-indexed LTD benefits do not include provisions for adjusting benefit amounts based on inflation or changes in the cost of living. The result is that the value of these benefits will remain fixed, potentially leading to decreased purchasing power as costs rise.

Non-indexed benefit policies generally have lower premiums but offer less financial security overall.

Long Term Disability: Indexed vs Non-Indexed


Indexed LTD Benefits

Non-Indexed LTD Benefits

Adjustment Frequency

Annually, typically ties to the CPI

Fixed, does not change over time

Inflation Protection

Benefits increase to match inflation rates or cost of living increases

Benefits remain constant and may lose purchasing power over time

Financial Stability

Offers stability and preserves purchasing power

Subject to the potential erosion of purchasing power


May have higher premiums initially but provides long-term security

Lower premiums initially but may result in decreased value over time


  • John receives $1500 in LTD benefits every month.

  • Inflation rose by 3% this year.

  • John's indexed LTD benefits are adjusted annually based on inflation.

  • If John's policy has a minimum adjustment of 2% and a maximum adjustment of 5%, his benefits would increase by 3%, bringing his new monthly benefit to approximately $1545.

  • John receives $1500 in LTD benefits every month.

  • Inflation rose by 3% this year.

  • John's non-indexed LTD benefits remain fixed at $1500 per month.

  • Consequently, despite the rise in inflation, John's benefits remain unchanged at $1500, potentially reducing their purchasing power over time.

As you can see, indexed benefits provide greater peace of mind through adjustments based on inflation and cost of living increases.

Some group policies may offer an alternative form of inflation protection, which can be confusing. This doesn't increase the monthly benefit but adjusts the prior earned income level, which is crucial for setting income when considering returning to work at a lower-paying job.

If this is confusing, you’re not alone. Thankfully, the experienced LTD lawyers at Share Lawyers are here to provide guidance.

What Can You Expect as a Share Lawyers Client?

At Share Lawyers, we prioritize your needs and provide personalized support, whether you have indexed or non-indexed benefits. We'll guide you through the complexities of your insurance policy and help you understand the differences between indexed and non-indexed benefits.

With our tailored approach, you'll receive individualized attention and advocacy, ensuring you make informed decisions about your benefits.

Share Lawyers Helps You Navigate Your Policy

Now that you know a bit more about long term disability index vs non-indexed benefits, it’s time to consider consulting with an experienced disability lawyer. For over 35 years, the Share Lawyers team has been dedicated to advocating for the rights of Canadians.

With a proven track record of over 8000 successful cases, we're passionate about assisting individuals in obtaining long-term disability benefits. When you cannot work and need support, Share provides a shoulder to lean on.

Still wondering about long term disability indexed vs non-indexed benefits? We can help guide you.

Contact Share Lawyers today and put our experience to work for you. Our 35+ 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.

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