Best long term disability insurance in 2024 + free quotes
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Discover the methodologyIf you suddenly found yourself unable to work for a long time, or even forever, how would you manage financially? While the Canadian Pension Plan (CPP) and Quebec Pension Plan (QPP) offer some help, it's often not enough and comes with a long wait.
That's where long-term disability insurance steps in. Long term disability insurance is designed to cover what public benefits can't, giving you a lifeline by replacing 60% to 70% of your income.
Let's dive into the world of long-term disability insurance in Canada, explore your options, and find the best plan for you. Our free tool is here to help you compare plans and get quotes easily.
Long term disability insurance: Key Takeaways
- LTD insurance offers critical financial support for extended periods of work incapacity.
- Covers 60%-70% of earnings with options for untaxed income.
- Public benefits like CPP/QPP and EI provide limited short-term support.
- Comparing private disability plans is crucial for adequate coverage.
- A disability insurance lawyer can assist with claim challenges.
Start exploring complete offers by clicking below:
The iA Financial Group's Superior Program offers maximum coverage of $120,000 and covers professional classes from 4A to C. With a minimum work time of 21 hours per week, this insurance does not require a minimum pre-tax income. It stands out with non-taxable monthly benefits and a vocational rehabilitation program. Ideal for newcomers, it includes four optional riders and can be renewed up to the age of 70.
Beneva's Disability Insurance offers a maximum coverage of $72,000 and covers professional classes from 4A to B without requiring a minimum income. Renewable until the age of 65, this plan stands out with its premium refund feature and the possibility of combining with group insurance. It includes four optional riders and does not require a medical questionnaire, offering great flexibility.
Canada Life's The Independence Protection Insurance offers maximum coverage of $300,000, one of the highest in the market. It covers professional classes from 4A to B and requires a minimum net income of $35,000 per year. This plan includes 13 optional riders, a partial disability option, and flexible benefit periods of up to 120 months. Non-cancellable until age 65, it is suitable for part-time and seasonal workers without a medical questionnaire.
What is long term disability insurance?
Long-term disability or LTD is insurance coverage that pays out if you suffer from a permanent disability or are unable to return to work for more than 6 months.
A long-term disability insurance policy can have waiting times and upper limits tailored to your specific needs and can offer untaxed, regular income to help pay expenses.
If you are temporarily disabled due to an accident or illness, a short term disability benefit or a different type of policy can cover a percentage of your earnings until you are well enough to return to work. This percentage is usually between 60% and 70%.
Every insurer will have shaped their long-term disability policy slightly differently. Typically, however, a policy will cover you for between 2 to 5 years.
After this time there will be a medical reassessment to verify if you can still longer work or if there are other types of work you might be able to do. For example, a physical disability that prevents you from working in construction might not prevent you from working in an office.
If you think long-term disability insurance is the right choice for you, compare the best LTD insurance offers on the market using our free comparison tool below. Get personalized long term disability insurance quotes in no time.
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How do long term disability insurance Canada plans work?
Say that you are working but fall ill, or are unlucky enough to suffer a debilitating accident. If you use all of your allotted sick days and are still unable to work then you would activate your short-term disability. This is either a privately funded policy, one arranged by your employer, or the government-run EI.
These policies are designed to run for a limited time and cover temporary disabilities. EI short-term disability runs out after 15 weeks. Private short-term disability can vary between policies but typically does not last longer than 6 months.
After short-term disability runs out if you are still unable to work you still will need to look either to a government pension plan or private long-term disability insurance.
Good to know
So, in a nutshell, what does long term disability insurance cover? LTDs essentially pay between 60% and 70% of your former earnings.
Do you have public disability insurance in Canada?
Canada provides public disability insurance, encompassing Employment Insurance (EI) sickness benefits. This initiative grants short-term economic aid to those unable to work owing to health issues, injuries, or quarantine, serving as a supplement to additional public disability aids like the Canada Pension Plan Disability Benefit. For comprehensive insights, including application procedures, eligibility criteria, duration of coverage, and further details, consult our full guide on Employment Insurance Canada: EI Benefits.
What is the difference between long term and short term disability insurance?
Long-term disability insurance begins when short-term insurance or EI benefits end. LTD insurance typically covers permanent disabilities, that is injuries or illnesses that will continue to affect your ability to work.
Long-term disability distinguishes between whether you can return to the job you had previously and whether you can work any job. For example, a loss of mobility might prevent a return to manual labour but not a less physically demanding office job.
Short-term disability covers temporary conditions with the understanding that you will return to work eventually.
| Types of disability | Nature of disability | Duration of disability | Distinguish between ability to do your job and any job? | Provided by |
|---|---|---|---|---|
| Short-term disability | temporary | Up to 6 months | Private or through an employer | |
| Long-term disability | permanent | After 6 months | Private or through government pension plan (CPP or QPP) |
What is group disability insurance in Canada?
Group disability insurance is a plan that provides coverage to a group of individuals such as company employees or a set group of members part of associations and organizations. If one of the named individuals on the group disability insurance policy can no longer work due to an injury or illness, the insurance will provide that individual with a replacement income. They offer both long-term and short-term coverage options.
How to apply for long-term disability benefits?
Long-term disability insurance can be purchased directly through an insurer or an insurance broker or online. Long-term disability policies can differ wildly in terms of contributions, upper payment limits, renewal, and waiting period. Some will ask for a second medical evaluation after 2 years, others after 5.
Finally, some policies will insure you in case you are unable to do your job, whereas others will insure you in case you can do any job. If you have a well-paid, high-skilled job that you are no longer able to do, the first type will compensate you while the second would not if you are still able to perform a lower-paid, low-skill job.
For all these reasons it is essential to identify your specific needs from a policy and shop around online to find the best deal for you. You can do it right here using our free comparator below.
Get a free disability insurance quote
Do I need long term disability insurance?
If you are unable to return to work you will need a source of income.
If you have contributed to the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP) you may be eligible for the CPP disability benefit or QPP disability benefit. The average monthly CPP disability payment in 2021 was $1,064.80. It is worth noting that after retirement, the disability benefit from CPP roughly halves to a 2021 average of $524.64.
If these amounts sound too low to cover your expenses then perhaps a long-term disability insurance plan could cover the deficit and boost your monthly income.
Additionally, low-income freelancers may have made extremely limited contributions to the CPP or QPP. If you suspect that you might fall below the minimum contribution threshold then long-term disability might be a necessary replacement.
What does long term disability insurance cost?
Long-term disability insurance typically costs between 1% and 3% of your gross earnings. Rates will vary between companies and depending on your age, income, and how long a waiting delay you decide on before the policy kicks in.
To give you a rough idea of costs, the table below outlines quotes for different age and income profiles from a leading policy provider:
| Age of insuree | Monthly salary insured | Monthly premium |
|---|---|---|
| 30 | $2,500 | $37 |
| 30 | $5,000 | $70 |
| 50 | $2,500 | $69 |
| 50 | $5,000 | $132 |
What qualifies for long term disability?
The definition of a disability can vary between different insurance companies and even between different policies in the same company. Your symptoms, their severity, and how they prevent you from working are more important in qualifying for short-term disability than the specificity of your condition.
However, a diagnosis allows a doctor to create a treatment plan for you. Insurers prefer to have a clear diagnosis and treatment plan and may stop payments or even deny your claim if they do not see an attempt to change your condition.
Watch out!
Some insurance companies may hire private investigators to surveil recipients of large long-term disability payouts, especially if you are young. However, they can only surveil you in public spaces (whether physical or online).
Burn-out and stress are vaguely defined conditions that will require a strong diagnosis in support of an approved claim. By contrast, depression and anxiety are nationally recognized as disabilities and have clear definitions and treatment plans.
Here are some common conditions that may qualify for long-term disability:
- Anxiety
- Back Problems
- Bipolar Mood Disorder
- Carpal Tunnel Syndrome
- Chronic Fatigue Syndrome
- Chronic Pain
- Complex Regional Pain Syndrome
- Crohn’s Disease
- Depression
- Fibromyalgia
- Heart Disease
- Headache and Migraine
- Irritable Bowel Syndrome (IBS)
- Knee Disorders
- Lupus
- Lyme Disease
- Multiple Sclerosis
- Neck and Cervical Disorders
- Psoriatic Arthritis
- Sleep Disorders
- Vestibular Disorders
- Visual Disorders
If you're denied claims, you can, of course, seek the help of a disability lawyer.
Who is a disability insurance lawyer and do I need one?
In Canada, a striking 60% of long term disability insurance claims are rejected, often including those that are legitimately filed. One frequent reason for denial is the insurer's judgment that the disability isn't severe enough for benefits.
Additionally, insurance companies sometimes rely on the assumption that claimants, burdened or disheartened, will not appeal their decision.
This situation underscores the importance of disability insurance lawyers. These professionals are adept at handling disability insurance claims and are instrumental in challenging and reversing unfair rejections.
Good to know
For a thorough understanding of the role and significance of disability insurance lawyers, their methods of operation, selection process, and fee structure, reading our detailed guide on long term disability lawyers can be very informative.
How long does long term disability insurance last?
Long-term disability begins once short-term disability runs out. If you are changing from short-term to long-term with the same company it will be a case of filling out forms to switch policies.
If you are changing insurance providers you will likely have to undergo another examination by a medical professional to certify that you are unable to work.
Policies vary between providers but after 2 to 5 years you will likely have to undergo another medical examination. This may determine whether you are unable to do any work or only the kind of work you used to do.
If you do not have specific insurance coverage for your type of job then you may have to get a different type of job that you are still able to do. These crucial differences between policies are why it is key to shop around online and find the right policy for you.
Good to know
You must know that coverage of plans might vary across provinces due to local laws and obligations. For instance, a long term disability insurance Ontario plan and long term disability insurance Alberta plan might not have the same coverage. It's best to therefore get personalized quotes.
Who pays for long term disability insurance?
The Canadian Pension Plan and the Quebec Pension Plan are paid for by your taxes. CPP and QPP benefits are distributed by the Canadian government. Self-funded private disability insurance is paid for by your contributions.
Is disability income taxable in Canada?
This depends on the type of disability insurance you have.
| Insurance provider | Who pays LTD benefits? | Is the LTD income taxable? |
|---|---|---|
| CPP or QPP | Canadian government | |
| Private LTD insurance | Insurance company | |
| Group insurance plan | Insurance company | |
| Employer-funded plan | Your employer |
If you want non-taxable, secure disability protection that is not reliant on your employer's cooperation, you can use our comparison tool to find the best deal to protect yourself and your income now.
Get a free disability insurance quote
What is the best long term disability insurance in Canada?
While the best plan depends on your individual needs, budgets, and constraints, here are some of the top disability insurance plans that offer comprehensive and diverse coverage options. These include RBC long term disability insurance, Manulife long term disability insurance, and more.
| Insurance Plan | Target Audience | Key Features | Coverage and Benefits | Get a quote |
|---|---|---|---|---|
| iA Superior Program (iA disability insurance) | Self-employed, business owners |
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| Canada Life Independence Plan | Non-traditional employment, limited access to employer coverage |
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| Beneva | Broad range of occupational classes |
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| Humania Income Insurance - Accident and Sickness | Wide range including part-time workers, students, and retirees |
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| RBC Professional Series® | High-income professionals |
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| Manulife Personal Accident Disability Insurance (long term disability insurance manulife) | Wide audience including unemployed and retirees |
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| RBC Quantum® | High-income earners (doctors, lawyers, etc.) |
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| Humania Assurance - Accident | Those in employment (including self-employed and seasonal workers) and those not traditionally employed (students, homemakers, unemployed, retirees) | A broad range of occupational classes |
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| RBC Bridge Series® | Small business owners, middle-income earners |
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| RBC The Foundation Series™ Policy | Small business owners, managers, tradespeople, farmers, middle-income earners |
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| iA Acci-Jet Program | Manual laborers, high-risk jobs |
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Other top plans also include TD long term disability insurance, Sunlife long term disability insurance, and Blue Cross disability plans.
