Canada Life Long-Term Disability Benefits What Happens After 2 Years
Long-term disability is insurance that pays monthly benefits to eligible people who become unable to work because of a medical condition, injury or disability.
The monthly payments are usually 65% of your pre-disability income. If your disability is permanent, payments can last until age 65.
Why is long-term disability insurance important?
Long-term disability insurance gives you financial protection from losing your income. You get monthly income replacement payments that allow you to pay bills and keep a lifestyle similar to what you enjoyed while working.
One in six Canadians will be disabled for three months or more by age 60. A 2019 insurance industry study found that 53,000 Canadians per year get approved for group long-term disability benefits. The reasons for disability included mental illness (Depression, Anxiety), chronic medical conditions (Chronic Pain, Fibromyalgia, ME / CFS, back pain, etc.) and injuries (car accidents, falls).
Without long-term disability insurance, you have limited options for long-term income support. You may qualify for CPP disability benefits, but those payments get capped at $1,457.45 per month.
Provincial disability benefits are another option for long-term financial support. However, you won’t qualify for these payments if you live in a household with another income earner or have savings or other assets.
Finally, if your disability was the result of a workplace injury, you might have disability coverage through a workers’ compensation program. But, these programs are limited to situations where your absence is caused by a workplace injury.
Long-term disability will pay benefits regardless of what caused your disability. There is no financial means test. You can get benefits — regardless of your household income. Therefore, disability insurance is the best way for workers to protect their income.
How does long-term disability insurance work in Canada?
Let’s now review how long-term disability works. To be eligible for long-term disability benefits, you must be a “covered person” under an insurance policy. This policy must be in place before you stop working.
To qualify for payments, you must meet your policy’s definition of “total disability”. The definition of disability is different in each policy. But generally, it will say that you become “unable to perform the essential duties of your own occupation, or any occupation, because of illness or injury.”
The payment amount is 60% to 75% of your regular income. The insurance company pays you monthly.
Long-term disability payments don’t start immediately. Most plans will require you to be continuously disabled for three to six months before you can start getting payments.
This time frame is called the waiting period or elimination period. During this time, you can receive short-term disability benefits either through a group insurance plan or from the federal government’s employment insurance (EI) sickness program.
Following is a typical example of how it works:
- You are working and have long-term disability coverage through your employer’s group insurance plan
- You develop a chronic illness that makes it harder for you to work
- After several months of struggling at work, you become unable to perform the usual duties of your “own” occupation
- Your doctor gives you a medical note putting you off work on sick leave
- You go on sick leave and receive short-term disability benefits through your group insurance plan
- After three months, your short-term disability benefits end, and you start getting long-term disability benefits
- After two years, the definition of disability changes to require disability from “any” occupation
- Your doctor confirms that you are also unable to do any occupation
- You continue to get monthly long-term disability payments until you can return to work or reach the age of 65
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