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Long-term Disability insurance

Long-term disability (LTD) insurance provides income replacement if you are unable to work for an extended period due to illness or injury. It ensures financial stability by paying a percentage of your regular income, typically between 60 and 85 percent, after you have been disabled for a specific waiting period known as the elimination period. LTD benefits continue until you recover, reach a set benefit end date, or reach retirement age, depending on the terms of the policy.

This type of insurance is especially important for protecting your ability to earn a living and maintain your financial obligations, such as rent, mortgage payments, and everyday expenses. Coverage can be provided through an employer’s group benefits plan or purchased individually. Group plans usually define disability as the inability to perform your own occupation for a certain period, after which the definition may change to any occupation you are reasonably suited for.

Example:

If you earn $6,000 per month and become unable to work due to a back injury, your long-term disability policy with 70 percent coverage would pay $4,200 per month after a 90-day elimination period, continuing for as long as you remain disabled under the policy definition.

What to Watch For:

Review how your policy defines disability, as this determines when and for how long benefits are payable. Check whether benefits are taxable, which depends on who pays the premiums. Understand how offsets work, as other income sources such as Canada Pension Plan Disability (CPP-D) may reduce the LTD amount you receive.

Related Terms

Lapsed Policy

A lapsed policy is an insurance contract that has ended because the required premium was not paid within the grace period. Once a policy lapses, coverage stops, and the insurer is no longer obligated to pay any benefits for claims incurred after the lapse date. A lapse can occur in any type of insurance - including health, dental, life, or disability - when the policyholder fails to make a payment by the due date and does not bring the account up to date before the grace period expires.

Laser Eye Surgery Allowance

A laser eye surgery allowance is a vision care benefit included in some health insurance plans that provides reimbursement toward the cost of corrective laser procedures such as LASIK or PRK. These procedures permanently reshape the cornea to improve vision and reduce or eliminate the need for glasses or contact lenses. Because laser eye surgery is considered elective and not medically necessary, it is not covered by provincial health insurance plans, making this allowance a valuable feature in private coverage.

Licence

A licence in the context of insurance refers to the official authorization granted by a provincial or territorial regulatory body that allows an individual or company to sell, advise on, or administer insurance products. Licensing ensures that insurance professionals meet educational, ethical, and legal standards required to operate in their jurisdiction. It protects consumers by ensuring that only qualified and accountable individuals provide insurance advice and services.

Life Insurance

Life insurance is a financial protection product that provides a tax-free lump-sum payment, known as a death benefit, to designated beneficiaries when the insured person dies. It is designed to replace income, pay debts, cover final expenses, or provide financial stability for dependents and loved ones. Life insurance helps ensure that family members can maintain their quality of life and meet ongoing financial obligations even after the loss of the primary earner.

Life Insured

The life insured is the individual whose life is covered under a life insurance policy. If the life insured passes away, the insurer pays the death benefit to the designated beneficiary or to the policyholder, depending on the policy structure. The life insured may or may not be the same person as the policyholder. For example, a spouse, parent, or business partner may own a policy that insures another person’s life.

Have questions about your insurance coverage?

Our licensed advisors can help you understand your options and find the right plan for your needs.