5 Things You Need to Know About Long-Term Disability Insurance

1. It Provides Income Replacement

Long-term disability insurance replaces a portion of your income (typically 60-70%) if you become disabled and unable to work. This financial protection helps you maintain your standard of living and cover essential expenses during a difficult time.

Benefits usually begin after a waiting period (often 90-180 days) and can continue for a specified period or until retirement age, depending on your plan.

2. There Are Two Types of Definitions

LTD plans use either "own occupation" or "any occupation" definitions of disability:

• Own Occupation: You're considered disabled if you can't perform the duties of your specific job, even if you could work in another field.
• Any Occupation: You're only considered disabled if you can't work in any job for which you're reasonably qualified.

Own occupation coverage is more comprehensive but typically more expensive. Understanding which definition your plan uses is crucial.

3. Pre-Existing Conditions May Affect Coverage

Most LTD plans have exclusions for pre-existing conditions, typically defined as conditions for which you received treatment in the 12 months before coverage begins. However, these exclusions usually expire after a certain period (often 12-24 months) of continuous coverage.

It's important to understand how pre-existing conditions are handled in your plan and when exclusions may apply.

4. Mental Health Conditions Are Often Covered

Many LTD plans cover mental health conditions, including depression, anxiety, and stress-related disorders. However, some plans have limitations on mental health coverage, such as:

• Limited benefit periods (e.g., 24 months maximum)
• Separate limits for mental health claims
• Different waiting periods

Review your plan details to understand mental health coverage specifics.

5. Integration with Other Benefits Matters

LTD benefits may be coordinated with other sources of income, such as:

• Workers' Compensation benefits
• Canada Pension Plan (CPP) disability benefits
• Employment Insurance (EI) sickness benefits
• Other disability insurance policies

Understanding how your LTD benefits integrate with other income sources helps you plan for adequate coverage and avoid gaps in protection.