TYPES OF DISABILITY INSURANCE
Long Term Disability (LTD)
This coverage starts when your short term disability (or EI) benefits run out.
Typically, the goal is to replace 60 to 70 per cent of your normal income, but
there is always a maximum dollar amount (e.g., $5000 per month). Given this,
if you earn a high income, group LTD plans may replace less than 60 to 70 per
cent of your pre-disability earnings.
LTD benefits are usually paid for up to two years if you are unable to perform your
regular occupation. After that period of time, you may have to be disabled from
performing any occupation for the benefits to continue.
Many plans include rehabilitation provisions designed to assist you in getting back
to work. In most cases, you are required to participate in programs that are
appropriate to aid in your recovery.
LTD benefits are usually reduced (or "offset") by any benefits you may receive
from CPP, QPP or WCB/WSIB. You can also receive disability benefits from other
sources that could be taken into account when your group disability benefits are
calculated by the insurance company. Read your benefits information carefully to
find out what types of other benefits or situations could lead to a reduction in the
benefits from your group disability insurance plan.
Your employer may pay the full cost of your disability coverage, or you might have
to contribute through payroll deductions. Generally, if you pay the full cost of the
premiums, any disability benefits that you receive will be tax free. If your employer,
union or association pays all or any part of the premiums for you, then any
disability benefits you receive will be taxable.
Administrative Services Only Plans
Are your benefits offered through an Administrative Services Only plan or an
insured plan? Although most group plans are purchased from an insurance
company by a plan sponsor and are insured plans, some large employers elect
to pay the costs of group plan benefits themselves, using an insurance company
only to administer the plan. These plans are called Administrative Services Only
(ASO) plans. Since these plans are not insured, the insurance company does
not guarantee benefits.
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