There are several types of disability insurance options available to provide benefits in the event you should become disabled and unable to work.

Individual Disability Policies

The best coverage available is an individual disability insurance policy, which should be purchased near the beginning of a career, when premium rates will be most favorable.  These policies will follow that person (provided premiums are paid) throughout their career regardless of whether they are self employed, or working for a larger organization.  It can supplement the group disability benefits available through an employer.  Frequently there are opportunities to increase coverage periodically along the way. These policies are often tailored to the person’s specific job (litigation lawyer vs. lawyer) so that they will pay a set monthly amount if the insured person can not do their specific job, even if they can do another type of job in the same general field. Purchasing an individual disability policy typically involves a detailed written application including medical history and family medical history, the provision of medical information from the doctor, as well as some testing (blood and urine).

Group Disability Insurance

Group plans are common through some employers and more common in some fields of work than others. Typically they are offered by the employer as part of a package of benefits which may also include health and dental benefits. The disability benefits available through group plans can provide a range of benefits which are typically based on a percentage of the person’s salary to be paid upon becoming disabled as defined in the policy.   The policies often define disability as a complete inability to perform the person’s own occupation  for an initial period (often 2 years) and thereafter a complete inability to work at any occupation for which the person is qualified by education, training and experience.  As a result of this change of definition, a lot of people have their benefits cut off at the two year mark, as the insurer believes they are not disabled from all occupations.  Many group policies provide for benefits to continue to age 65 in the event the person continues to be disabled from working for that period of time, but some policies provide for a shorter, time limited duration (such as 2 years).  Group policies often involve waiting periods, both for when coverage will start (sometimes no coverage is available during the first several months with a new employer), as well as when benefits would start to be paid after becoming disabled (there is often a waiting period between the date of disability and the date benefit payments commence – often 3 months). Pre-existing conditions may prevent an employee from claiming group disability benefits if the disability occurs within a short time after commencing the employment. If the premiums for the group disability insurance are paid by the employer, the benefits will be taxable when received by the employee.  If the employee pays the premiums, then the benefits are received tax free.

Employment Insurance (EI)

Employees in Canada can apply for EI Sick Benefits in the event they become disabled and are unable to work.  These benefits are available to all employees but are time limited and have a modest maximum benefit available.  Claimants could receive 55% of their earnings up to a maximum of $650 per week for up to 26 weeks (recently increased from 15 weeks). This coverage can assist during the waiting period for long term disability benefits through either group of individual plans, but EI is not the solution for a lengthy or permanent disability.

Ontario Disability Support Plain (ODSP)

Ontario residents can apply for ODSP income support which currently pays up to $1,228 per month with other benefits also available (prescription drug, dental and vision coverage).  When applying for ODSP the income and financial situation of your entire family unit will be considered as it is a needs based program not dependent only on your ability to earn income.

Canada Pension Plan Disability (CPPD)

Canadians can also apply for Canada Pension Plan Disability Benefits.  To be eligible a person must be under the age of 65, have contributed enough to the Canada Pension Plan and have a long term or indefinite disability that prevents them from doing any substantial gainful work. The basic benefit for CPPD is $558.74 to which is added an amount based on contributions made to the plan by the individual while working. The average monthly CPPD benefit is currently $1,078.07.  The maximum monthly amount in 2023 is $1,538.67. Dependent children may also be eligible for children’s benefits (maximum monthly benefit in 2023 is $281.71). CPPD aims to process applications for these benefits within 4 months of receipt of an application, but people have certainly waited much longer in the past.

Interplay

When applying for or receiving disability benefits from any of these sources, it is important to be transparent about what other benefits are being applied for or received. There is a mandated priority of payment and deductibility process which impacts the amount or qualification to receive benefits. Failure to disclose benefits or income received will result in overpayment and an obligation to repay benefits received in error.

Government benefits are usually only a partial or temporary solution. Planning ahead and ensuring that adequate individual and / or group disability benefits are in place is strongly recommended.  A qualified insurance broker or financial planner is a good resource to help review the available coverage and help ensure that adequate insurance is in place should the need arise in the future.

In the event of a denied claim for disability benefits, a personal injury lawyer can provide advice of how best to proceed.  The lawyers at Burn Tucker Lachaine PC have extensive experience pursuing claims for disability insurance and would be happy to discuss your options following a denial of a disability insurance application.