How Does Long-Term Disability Insurance Work?

When you think of a disability, you probably think of a long-term condition like paralysis or a terrible disease that limits a person's ability to work and make money.

Consider the case of a construction worker who is paralyzed from the waist down due to a vehicle accident. What does he do now that he can't do the tasks of his regular work and make a living? How will he support himself and his family in the future?

Long Term Disability Insurance may help with this.

What is Long-Term Disability Insurance, and how does it work?

When a covered plan member cannot work due to an accident, sickness, or injury that prohibits them from performing their employment tasks, Long Term Disability (LTD) Insurance offers financial help. The benefit may give income replacement up to the age of 65, depending on the extent of the condition.

Employers should provide long-term disability insurance for a variety of reasons.
Would your workers' families be able to maintain their existing standard of living if they were unable to work and earn a living? Would they be able to keep their home and pay their bills? Could they afford their vehicle payment, as well as adequate food and clothes for the whole family?

These are difficult questions, but the answers matter. Accidents happen to the best of us when we least expect them. When an employee's disability or sickness stops them from working and earning money, they need to be protected.

The following are three significant reasons why LTD should be included in your employee benefits package.

Allows you to replace your income
No one wants to think about the possibility of requiring a product like LTD. Still, it may help replace lost income in scenarios when an employee cannot work and generate an income for an extended period. This allows the family financially, lessens the financial load, and may make an already tricky situation less so.

Accidents Occur.
A 30-year-chances old's of being handicapped is four times higher than his chances of dying before reaching the age of 65. Before 50, one in every six Canadians will be disabled for three months or longer.

All of this demonstrates that it may happen to anybody.

Disability Insurance is a highly sought-after benefit to attract and retain top talent. Prospective workers are increasingly scrutinizing an employer's benefits package. Disability Insurance is towards the top of the priority list, and the more comprehensive the plan, the better.

What Is Long-Term Disability Insurance and How Does It Work?

LTD coverage is often provided for injuries or illnesses that restrict someone from fulfilling their job tasks. LTD typically includes coverage for injuries or illnesses that prevent someone from performing the duties of their profession. Specific definitions of disability vary by insurer; however, LTD typically provides coverage for injuries or illnesses that prevent someone from performing their job duties. In addition, LTD offers additional income for two years in their employment or until they reach the age of 65 if they cannot work in any occupation.

Consider the following examples of typical claims:

  • Disorders of the musculoskeletal system
  • Cancer
  • Pregnancy
  • Depression and anxiety are examples of mental health concerns.
    Fractures, sprains, and strains of muscles and ligaments are serious injuries.

What is Short Term Disability (STD) Insurance, and How Does It Work?

LTD isn't the only kind of disability coverage available!

Short Term Disability (STD) replaces a regular income for a short period, usually between 13 and 26 weeks. An employee may be off work during this period while still getting a part of their salary. Within the short-term disability period, a large majority of workers will return to work.

Disability Insurance: Short Term vs. Long Term

View this infographic to learn how Short Term and Long Term Disability Insurance may help safeguard workers' health, money, and well-being.

Frequently Asked Questions about Long-Term Disability Insurance

Many questions must be addressed for persons who feel they may be eligible for long-term disability payments via the Canada Pension Plan.

  • What is the CPP's definition of disability?

Disability, according to the government, is defined as "severe" and "prolonged" and must prevent a person from returning to work on a regular basis, or is probable long-term and may result in death.

  • I'm not sure whether I'm eligible.

Disability payments are available to those under the age of 65 who have had to leave employment due to a medical condition, have paid into the Canada Pension Plan for four of the previous six years, or have paid into the plan for 25 years and made contributions for three of the previous six years.

  • What is the procedure for submitting an application?

Anyone interested in applying must complete an application form, which may be obtained through Service Canada. It consists of application forms for the applicant and any dependents, a questionnaire, a doctor's medical report, a permission form, and a child rearing provision form. Keep in mind that all forms must be sent or handed to a local office. Forms sent through email will not be accepted.

  • How long does it take to get approval?

CPP will make a judgment in most cases within 120 days, or 48 hours if the applicant is terminally ill.

  • How much money will I get?

In 2019, the maximum amount a person may get from a long-term disability benefit is $1,362.30 each month until they reach the age of 65. Spouses and surviving children are also eligible for further payments.