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Should Long Term Disability Insurance be Part of your Financial Plan?

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This article is intended to provide individuals in Canada with general information pertaining to long term disability insurance, a coverage plan that pays percent of your salary while you are unable to work due to a disability.

Long term disability insurance is a coverage plan that pays you a percent of your salary while you are unable to earn income due to a disability. What would you do if you were injured and could not work? Would you be able to survive without an income? You may be able to draw from your savings for a while, but that could eventually leave you high and dry. Many people do not realize that getting injured can drastically change your life.

Long Term Disability Insurance ClaimSetting up a long term disability insurance plan can alleviate your worries and give you a good night’s sleep, knowing that you and your family will be taken care of in the event of a disability that would prevent you from working. For a shorter period of coverage, you would require short term disability insurance (see article13-short-term-disability-insurance.html).

The most common reasons for being absent at work for an extended period of time are: maternity leave (or health complications related to pregnancy), cancer treatment, and back injuries.

Receiving Long Term Disability Benefits
The length of time for which you are eligible to receive benefits varies in accordance to the terms of your policy. It can range from two years, five years, or until the age of 65 (or when you retire). Typically, it takes from 30 days to six months before the claimant receives the first benefit payment.

Types of Long Term Disability Insurance

There are two ways to obtain long term disability insurance. One way is through your employer, a professional group, or an association. This is known as group coverage. In order to be eligible for this coverage, you must have been working under the same employer or have been a member of the professional group or association for a specific period of time.

The other way to get long term disability insurance is through individual coverage, which can be purchased from an insurance broker, provided you meet the set criteria. Below you will find tips on what to look for when purchasing this type of coverage.

The majority of policies are sold on either a non-cancelable basis or on a guaranteed renewable basis. A non-cancelable policy indicates that the insurance company cannot cancel your coverage as long as you pay the premiums, nor can it raise the rates. This policy requires an initial medical exam. If you opt for a guaranteed renewable policy, the insurance company cannot cancel your coverage, but it can however raise the rates.

What to Look for in an Individual Insurance Plan
Basic knowledge and diligent research is the key to making good decisions. Here are a few things to consider when looking for an individual long term disability insurance plan:

  • Definition of disability: some insurance plans will pay out benefits if your disability prevents you from doing your current job, while others will pay out benefits only if you are unable to work in any type of job.
  • Payment date: while it usually takes anywhere from 30 days to six months to start receiving benefit payments, some policies will allow you to choose the length of your waiting period.
  • Length of coverage: as previously stated, long term disability insurance can last from two years to five years or until you turn 65. The longer the period of time allotted, the higher the premium.
  • Extent of disability: some policies require that you be completely disabled before any payments can be allocated, while others will pay for partial disability.
  • Cost of Living Adjustment (COLA): it allows benefits to keep pace with inflation or gradual salary increases. You can request that COLA be added to your basic policy.
  • Premium waiver: many policies include what is known as a “waiver of premium” which ensures that you will not have to pay any premiums if you are disabled for 90 days or for a longer period of time.


About the Author:
Adriana Stefania is a freelance writer for Canada Health Insurance. For more information on health insurance for Canadians please visit