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Insurance Types

Long Term Disability

Long Term Disability (LTD) plans are designed to provide salary replacement for plan members who become disabled due to illness or injury for extended periods of time.  The waiting period (also known as the elimination period or qualifying period) is the number of days from the start of disability that must elapse before benefits are payable, typically 119, 120 days or 180 days. The waiting period for LTD is usually equal to the maximum benefit period of your Employer’s STD plan (short term disability), to avoid a gap or overlap with the LTD. If changes are made to your STD benefit period, it is important you also review your LTD waiting period to ensure they align.

Definition of Disability

LTD plans usually have two definitions of disability. The first applies during the Initial Assessment period, which consist of the waiting period, and, generally, the first two years of benefits. This refers to ‘own occupation’. The second definition know as the ‘any occupation’ applies from the end of the initial assessment period to the end of the benefit period, usually age 65.

Taxability

If the employee pays the entire LTD premium, LTD benefits paid to the plan member are not taxable to the employee. If your company pays for the premium, the benefit will be taxable to you.

Termination of Benefits While Disabled

Termination of your benefit plan (health and dental) coverage for whatever reason, including termination of employment or the group plan, does not affect disability benefits as long as disability commenced prior to the termination. It is important to determine a company policy surrounding benefits and disability. For example, you can set a policy that states that group benefits, such as health, dental, AD&D, will terminate after 2 years.

Termination

Most LTD plans terminate at the age 65, which is the industry standard. If you continue to meet the definition of disability, your benefits will continue until the termination age as outlined in your policy. Not as popular, there are LTD policies that terminate at the 2 year and at 5 years. This is more typical with non-white-collar industries.

How to apply for LTD

If you think you might need LTD, it's important to apply before your STD benefit or EI ends. The application process may vary depending on your situation and your Insured may require specific documents to process your application. You can find more information by contacting your employer's HR department.

In conclusion, Long Term Disability is a benefit designed to help protect your income in case of unexpected events. By knowing how this program works and how to apply for it, you can have peace of mind knowing that you have financial support when you need it most.

We hope you found this newsletter helpful.