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What is Long Term Disability Insurance?      Listen Here

Long Term Disability Insurance is meant to replace your income if you're unable to work because of an accident or illness.


Usually, premiums will be 2-5% of your income. It seems like a huge range, but there are a wide variety of factors that affect the cost. 

Most insurance companies will offer you some choices that will affect your premium.


You can choose to protect up to 66% of your income. Receiving 66% of your income tax free will roughly replace your pre-claim, after tax income. The coverage is capped to prevent people from being better off on claim, somewhat encouraging bad behaviour.

Duration of Benefits:

Commonly 2 year, 5 year, and to age 65 benefit periods are offered.
Coverage up to age 65 should usually be your first choice.

Waiting Period:

Waiting, or elimination period determines how long you have to be unable to work before you receive any benefits. 

Choosing a long waiting period can save you money, like having a high deductible with your home insurance. It's important to have an emergency fund set aside so you can get through your waiting period.

Waiting periods ranging from 0-120 days are common. 90 days is often the most economical wait.

Definition of Disability:

Companies will offer policies varying definitions. Some policies will define disability as "you are unable to perform the duties of your own occupation" Others will say you are only disabled if you can't perform any occupation. Some policies will offer a period of "own occupation" followed by "any occupation" coverage. Meaning that if you can't perform your job they will cover you, but after a period of time, they will expect that if you are able to do any job, you will go back to work. The primary purpose of insurance is to protect yourself from catastrophic loss. It's not necessarily catastrophic if you have to make a career change. Insurance companies will offer more "own occupation" coverage for people who are highly trained.

Cost of Living Adjustment:

In order to make up for the effects of increased cost of living over time, the cost of living, or inflation rider will increase your benefit over time.

Partial and Residual Coverage:

Different companies will offer different options related to only being able to work part-time, or only take care of some of your duties. This will result in partial coverage. Often, the company will pay for rehabilitation, in order to get you back to work. Win-win for everybody.

Return of Premium:

Some policies, as an incentive to stay safe and healthy, will offer to return some or all of your premiums after a set period of time if you haven't made any claims.

Accident and Sickness:

Some policies will offer accident only coverage. If you're healthy, you should strongly consider accident and illness coverage.

Individual or Group Coverage: 

It is common for workplaces to offer long-term disability coverage. Make sure you know and understand what you have. If you don't have LTD coverage through work, make it a priority to obtain an individual policy.

Your ability to work, and earn an income is one of the most valuable assets that you have.

1/3 of Canadians will become disabled at some point during their working years.