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Disability Insurance (Overview) Blog by Owen Cromb

Disability insurance is intended to provide financial security for unexpected accidents or illnesses that impact your ability to work. Disability insurance provides replacement income, to varying degrees, during the period of time in which you are unable to work. The definition of disability is not standardized across insurance companies, so navigating the disability insurance process can be complex and time-consuming, particularly if you are injured or sick.

Generally, policies provide two categories of disability coverage, short term disability claims (STD) and long term disability claims (LTD). STD is usually the first phase of a disability claim, and it provides benefits for a sick or injured person for up to six months. If after the six month period in which a person is claiming STD benefits ends and the person remains unable to return to work because of their ailment, they will often apply for LTD. While on LTD a policyholder generally receives income replacement benefits between 60%-70% of their pre-disability income, and typically LTD provides for benefits for up to two years.

Many disabilities are not resolvable in two years, this leaves people concerned about what they can do once LTD benefits end after two years. Private insurance plans are not the only form of disability benefits available to people. The Canada Pension Plan Disability (CPP) is a benefit available to Canadians who are under the age of 65 and are now disabled and in need of support. CPP is a public alternative to private disability insurance, though the amount of income replacement available under CPP is typically lower than under private insurance. However, a person can claim under a private plan and through CPP. In order to receive this benefit the applicant must demonstrate the following:

  • They are under 65
  • They suffer from a severe and prolonged disability; and
  • They have made sufficient CPP contributions during their working years.
  • Further, an applicant’s receipt of other disability benefits such as Long Term Disability is not an indication that their CPP disability application will be successful.

If you have been denied coverage, contact Ferguson Deacon Taws to assist you with the preparation and submission of your initial application and/or appeal the denial of your application. Call FDT Law today at 1-800-563-6348.

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