Facing a serious illness or injury is one of the most stressful experiences a person can go through. The physical and emotional toll is heavy enough without the added burden of financial insecurity. If you are unable to work for an extended period, you might rely on insurance to keep your household running. This is where long-term disability (LTD) insurance is supposed to step in.

However, navigating the world of insurance policies, medical evidence, and claims processes can feel overwhelming. Many policyholders assume that if they have coverage and a doctor’s note, their benefits are guaranteed. Unfortunately, the reality is often more complex. Understanding exactly what long-term disability insurance is, how to apply, and why claims are sometimes denied is the first step toward protecting your financial future.

Key Takeaways

Income Protection: LTD provides a portion of your monthly income (usually 60% to 70%) if you cannot work due to a serious medical condition.
The Waiting Game: There is a mandatory waiting period, known as the elimination period, before benefits begin.
Definition Change: Most policies change the definition of disability from “own occupation” to “any occupation” after 2 years, which is a common trigger for LTD benefits being cut off after 24 months.
Medical Evidence is Key: Successful claims rely on detailed proof of functional limitations, not just a diagnosis.
Denials Are Common: Insurers frequently deny claims due to insufficient evidence, but these decisions can often be challenged with legal help.

What Is Long-Term Disability (LTD) Insurance?

Long-term disability insurance is a type of insurance policy designed to replace a portion of your income if you become disabled and are unable to work for a prolonged period. Unlike short-term disability or Employment Insurance (EI) sickness benefits, which typically last for 15 to 26 weeks, LTD benefits are intended for more severe or chronic conditions that keep you out of the workforce for months or even years.

For many Canadians, LTD benefits in Canada function as a vital safety net. It ensures that you can pay your mortgage, buy groceries, and manage medical expenses even when a paycheque stops coming in. These benefits can continue until you are able to return to work, reach age 65, or for a specific number of years defined in your policy.

How Does Long-Term Disability Insurance Work? (Step-by-Step)

If you are wondering, “How does long-term disability work?” in a practical sense, it helps to view it as a timeline. The process involves several distinct stages, each with its own requirements and deadlines.

The Onset and Short-Term Leave

When an illness or injury first prevents you from working, you typically do not apply for LTD immediately. Most workers first use sick days, apply for EI sickness benefits, or utilize a short-term disability plan if their employer offers one.

The Elimination Period

Every disability insurance policy includes an elimination period for LTD. This is a waiting period ordinarily ranging from 90 to 120 days (sometimes longer) from the date of disability. You must remain continuously disabled throughout this period to qualify for benefits.

The Application

Ideally, you should apply for LTD roughly 6 to 8 weeks before your elimination period ends. This application requires three main components:

Plan Member Statement: Your report on your condition and how it affects your life.
Plan Sponsor Statement: Your employer’s report confirming your employment details and job duties.
Attending Physician Statement: A detailed medical report from your doctor outlining your diagnosis and functional limitations.

The Adjudication

Once submitted, a case manager, insurer review/adjuster, or other reviewer will evaluate your file. They will determine if your medical evidence proves you meet the policy’s definition of total disability.

What Does Long-Term Disability Cover (and Not Cover)?

LTD insurance generally covers any medical condition that prevents you from performing the essential duties of your job. This is not limited to physical injuries.

Common conditions covered include:

Musculoskeletal injuries (chronic back pain, arthritis)
Cardiovascular disease
Cancer and recovery from treatments
Mental health issues (depression, anxiety, PTSD)
Neurological disorders (MS, stroke)

What is typically excluded:

Pre-existing conditions: Many policies have a clause excluding conditions you received treatment for before your coverage started. This pre-existing condition clause usually applies to medical issues treated in the months before you became insured (often relevant for new employees).
Criminal acts: Injuries sustained while committing a crime.
Self-inflicted injuries: Specific exclusions may apply here depending on the policy wording.

Group LTD vs Private Disability Insurance: What’s the Difference?

Most Canadians have group disability insurance through their workplace benefits package. In these plans, the employer holds the master policy, and the coverage terms are standard for all employees. These are generally easier to qualify for as they often do not require a medical exam to enroll, but they are tied to your employment.

Private disability insurance is an individual policy you purchase directly from an insurance broker. These policies are portable (they stay with you if you change jobs) and often offer better terms, but they require strict medical underwriting to purchase.

How Much Does LTD Pay in Canada?

The amount you receive depends on your specific policy, but it is typically calculated as a percentage of your pre-disability gross monthly income. Most plans replace between 60% and 70% of your earnings, up to a monthly maximum cap.

Taxable vs. Non-Taxable

A critical factor is who pays the premiums.

If your employer pays the premiums, the benefits you receive are generally taxable income.
If you pay the premiums (via payroll deduction), the benefits are usually tax-free.

Offsets and Reductions

Insurance companies will reduce your LTD payments if you receive income from other sources. This prevents you from earning more while disabled than you did while working. Common offsets include:

CPP disability vs LTD: If you are approved for the Canada Pension Plan (CPP) disability benefit, your insurer will reduce your LTD payment by that amount.
Workplace Safety and Insurance Board (WSIB) benefits.
Severance pay or litigation settlements.

The Biggest LTD Rule: “Own Occupation” vs “Any Occupation”

Understanding the difference between your own occupation vs any occupation disability definitions is perhaps the most important part of your policy.

Own Occupation (The First 2 Years):

For the initial period of your claim (usually the first 24 months), you are considered disabled if you cannot perform the essential duties of your own specific job.

Mini Example: Maria, a dental hygienist, develops severe carpal tunnel syndrome. She cannot hold dental tools, so she cannot do her specific job. She qualifies for LTD under the “own occupation” definition.

Any Occupation (After 2 Years):

After 24 months, the definition usually changes. To continue receiving long-term disability benefits Ontario, you must prove you are unable to perform the duties of any occupation for which you are reasonably suited by education, training, or experience.

Mini Example: Using the example above, after two years, the insurer might argue that while Maria cannot work as a hygienist, she has the education and experience to work in hospital administration or a call centre. If she can do those jobs, her benefits may be cut off.

What Medical Conditions Qualify for LTD?

There is no specific list of conditions that automatically guarantee approval. Instead, approval is based on restrictions and limitations. You must prove that your symptoms prevent you from doing the tasks your job requires.

For instance, a diagnosis of depression alone is not enough. You must provide medical evidence showing that your depression causes lack of focus, fatigue, or cognitive impairment severe enough that you cannot function in your workplace.

Why LTD Claims Get Denied (Most Common Reasons)

Receiving a denial letter is disheartening, but it is also common. Insurers are for-profit businesses that closely scrutinize claims.

Common reasons for an LTD claim denial include:

Insufficient Medical Evidence: The attending physician’s statement was too vague or did not list specific functional limitations.
Surveillance: The insurer obtained video or social media evidence that appears to contradict your claims of disability.
Failure to Treat: You are not following your doctor’s recommended treatment plan.
Missed Deadlines: Failing to submit forms within the elimination period or appeal windows.
Contractual Exclusions: The condition falls under a pre-existing condition clause.

What to Do If Your LTD Claim Is Denied or Benefits Are Cut Off

If your claim is denied, do not panic or give up. A denial is not the final word. You have the right to appeal or take legal action.

Read the Denial Letter: It will specify exactly why you were denied. This tells you what evidence is missing.
Gather More Evidence: Ask your doctor for more detailed reports or see a specialist to verify your condition.
Contact a Lawyer: The disability insurance appeal process within the insurance company is often biased. Internal appeals frequently result in a second denial. An experienced long-term disability lawyer can file a lawsuit against the insurer, which often yields better results than navigating the insurer’s internal appeal system on one’s own.

Note: Strict time limits apply to taking legal action. It is crucial to act quickly.

If your claim was denied or your benefits were cut off, Lang Lawyers can review your situation and explain your next steps.

FAQ About Long-Term Disability Insurance in Ontario

How long does long-term disability last in Canada?

Benefits typically last until you can return to work, reach age 65, or reach a specific age defined in your policy. However, you must continue to meet the definition of disability to keep receiving payments.

How long does it take to get approved for LTD?

Once you submit your application, insurers generally take 30 to 60 days to make a decision. However, delays in receiving medical reports can extend this timeline.

What is the waiting period for LTD benefits?

This is called the elimination period. It is usually 90 to 120 days (or roughly 17 weeks) to align with the end of EI sickness benefits.

How much does LTD pay in Ontario?

Most policies pay between 60% and 85% of your pre-disability net income, or 60-70% of your gross income, usually capped at a monthly maximum (e.g., $5,000 or $10,000).

Is long-term disability taxable in Canada?

It depends on who paid the premiums. If you paid 100% of the premiums yourself, benefits are tax-free. If your employer paid any part of the premiums, the benefits are generally taxable.

Can you work while on long-term disability?

Some policies allow “rehabilitation employment” or a gradual return to work, where you can earn income while receiving partial benefits. Always check with your case manager before working, or you risk a claim denial.

Why do LTD benefits stop after 24 months?

This is due to the “change of definition” from “own occupation” to “any occupation.” If the insurer believes you can do some type of work, even if it’s not your old job, they will terminate benefits.

Can LTD be denied for depression or anxiety?

Yes. Mental health claims are denied frequently because symptoms are “invisible” and harder to prove than physical injuries. Strong support from a psychiatrist or psychologist is essential.

What happens if the insurance company denies my LTD claim?

You will receive a letter explaining the decision. You can choose to appeal internally or hire a lawyer to pursue a legal claim for your benefits.

Should I appeal an LTD denial or hire a lawyer?

Internal appeals have a low success rate. It is often more effective to consult an insurance claim lawyer who can bypass the internal run-around and pressure the insurer to settle.

Protecting Your Future When Disability Strikes

Understanding what long-term disability insurance is and how it works is the first line of defence in securing the benefits you have paid for. While the system is designed to provide safety, the complexity of short-term disability vs. long-term disability transitions, offset rules, and the dreaded “any occupation” test can leave honest claimants without support.

If you are struggling with a difficult insurance company, remember that you do not have to fight them alone. Whether you need help with long-term disability claim denial help, are facing disability insurance disputes, or need guidance on CPP Disability support, professional legal counsel can level the playing field.

Are you dealing with a denied claim or reduced benefits? Contact Lang Lawyers today for a consultation. We can help you navigate the legal environment and fight for the income security you deserve.