Long Term Disability (LTD) Insurance is a financial safety net provided by your employer, for covered plan members, who aren’t capable of performing their work duties due to an accident, illness, or injury.
Depending on the severity of the illness, long term disability insurance, which you are eligible for from your employer, can offer a substitute for income lost while off work. Many employers in Canada offer long term disability insurance as part of a group benefit package.
If you’re wondering “what IS long term disability insurance through your employer?”, keep reading.
How long term disability insurance through an employer supports you
Long term disability benefits that you are eligible for through your employer are intended to cover disabilities that typically extend beyond a six-month period. Usually, these policies start paying benefits once short term disability insurance benefits or EI (Employment Insurance) government benefits have run out.
Here's an easy way to understand it: If you become sick enough that you’re unable to work, and you have disability insurance coverage, you would usually transition through three distinct "disability" phases:
Very short-term disabilities
Long term disability
You would take sick leave and your employer may compensate you directly, although they are not obligated to do so.
You would receive short term disability benefits
You would transition to long term disability benefits, provided by your insurance company. If your disability prevents you from returning to work, you could potentially remain on these benefits until the age of 65 or longer.
Why is it important to have long term disability insurance?
If an injury or illness leads to disability or disabling symptoms—which one out of every six Canadians will deal with before the age of 50—it is essential to be able to protect your income. Long term disability insurance through an employer is a means of managing that risk. It is designed to offer a safety net and provide a source of income in the event you cannot work.
Many employers offer long term disability insurance as part of a benefits package. LTD insurance is designed to pay a portion of your income. Your level of coverage depends on your income and on what insurance is provided by your employer. There are many different types of policies available through many different insurance companies, but all fall under two categories: employee disability insurance and privately purchased disability insurance (purchased by those who are self-employed).
How does employer sponsored long term disability insurance work?
Within an insurance company there are several departments, including underwriting and claims.
An underwriter decides whether applications for insurance coverage (risks) should be accepted and on what terms. In the disability insurance market, an underwriter assesses risk according to the likelihood of an employee becoming disabled and assigns a dollar value to that risk in the form of an insurance premium. That premium is calculated by weighing a number of factors and asking for detailed information from prospective clients (employers). An insurance company operates under the assumption that premium dollars paid by its insured, or “policyholders,” and the return on its investments from those premium dollars will be greater than claims incurred (money paid out) and expenses.
If you have filed a disability claim, you will most likely be familiar with your claims adjuster, sometimes referred to as a claims analyst. A claims adjuster generally determines the extent and validity of claims. He or she assesses liability and negotiates any payments paid out by the insurance company. Claims adjusters are responsible for managing and controlling claims costs.
They manage the process of dealing with a claim when it is first made and follow it through. Thus, the claims adjuster is normally the representative at the insurance company with whom the individual filing a disability claim is most familiar.
It’s important to remember that claims adjusters are not on your side. Their main objective is to make sure they pay you as little as possible for your claim or find an excuse to deny it outright.
A long term disability lawyer with experience working with insurance companies can assess what you are entitled to and work directly with the insurance company to secure those long term disability benefits for you.
If you are considering stopping work to apply for long term disability insurance through an employer, but you’re not ready to talk to anyone yet, you can read through the Stopping Work page on our website.
Denied your long term disability claim?
Contact the disability insurance lawyers at 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. We offer free consultations and there are no fees unless you win your case.