How much is my Ontario long-term disability claim worth?
The monetary value of a long-term disability claim depends upon a number of factors. The initial factor of course is whether you can prove you are entitled to long-term disability benefits (which comes down to whether you can show you meet the policy definition of disability), and if so, your age and likely prognosis (i.e. if you are expected to recover within six months, your claim will have nominal value, whereas if your injury is expected to persist for the duration of the policy, its value will be higher).
How is entitlement to long-term disability determined?
Entitlement to long-term disability benefits typically arises after an individual (with long-term disability coverage) suffers an injury and is no longer able to perform their own job or any other job for which they are qualified through experience, education and training. In determining whether the injured person could theoretically perform another job, some long-term disability policies require those other jobs to have earnings of at least a certain percentage (i.e. 60 per cent) of their prior earnings. Unlike workers’ compensation, entitlement to long-term disability benefits is not limited to people who were injured while on the job (i.e. you may be entitled to long-term disability benefits if you were involved in a serious car accident which has prevented you from working for instance).
In most cases, proving entitlement to benefits is dependant upon having strong medical documentation of your injuries (i.e. medical records showing continuous treatment) along with favourable reports from your treating doctors and specialists (i.e. ‘Bob is unable to return to work at this time’). Likewise, entitlement can also be dependent upon the absence of surveillance showing you engaging in activities that are incompatible with your alleged disability (if you are claiming you cannot work due to a back injury, best not to be photographed waterskiing, moving couches etc.).
I’ve proven entitlement to long-term disability benefits – how much will I get if I go to court?
A common misperception surrounding long-term disability claims is that the claimant (policyholder and/or insured) will receive a windfall if they ‘go to court,’ (i.e. their benefit amount in a lump sum, from the present until age 65). In fact, at best, they will be awarded outstanding benefits, a nominal amount of interest on outstanding benefits, and have the court order that their benefits be reinstated, which would again subject them to the terms of the policy.
For example, if your benefit amount was $1,000 per month ($12,000 per year), and benefits were terminated four years before the trial, and you did not work during that time (or receive other benefits such as CPP or WSIB), you could potentially recover $48,000 at trial, plus a nominal amount of interest, and an order that your monthly $1,000 benefit be reinstated. Of course, you could be required to again prove your entitlement to benefits at various times, attend examinations at the request of your insurer and be at risk of surveillance.
So how much are my lump sum disability benefits worth in a lump sum settlement?
In some cases, it may be preferable to both the insurer and the claimant to attempt to reach a lump sum settlement, whereby the insured receives a lump sum settlement, in exchange for giving up on their future entitlement to benefits. However, the value of any such settlement is dependent upon a number of factors, which include:
- Your age;
- Duration of policy benefits, i.e. until age 65?
- The amount of past due long-term disability benefits outstanding;
- The strength of your claim to entitlement;
- Whether benefits contain a cost of living allowance;
- Whether your benefits are taxable or non-taxable;
- Whether you are or are likely in future to receive any collateral benefits such as CPP and/or WSIB, provided the policy permits the insurer to offset same;
- Whether you have any other source of income, in the event the policy contains an ‘All Source Maximum Provision’;
- Other actuarial contingencies, i.e. that you no longer meet the policy definition of disability;
- Whether there has been any particularly egregious handling of the claim, beyond the typical;
- The specific language of your long-term disability policy.
How do offsets work?
Offsets reduce the amount of benefits a long-term disability carrier must pay. For example, let’s assume Tim is 45 years old, and is entitled to $2,000 in long-term disability benefits per month, until age 65. However, suppose Tim is receiving $1,500 in CPP disability every month. In that case, his long-term disability insurer is only responsible for the difference, or $500 per month. The CPP payments would have a corresponding impact upon the value of a lump sum settlement.
I’m on ODSP, how will a lump sum settlement affect my entitlement to ODSP?
In 2018, the current asset limit for ODSP is $40,000. If after a settlement, you will end up with assets in excess of that, you should check with your Ontario Disability Support Program worker as to the impact that will have upon your entitlement to ODSP.
What should I do if my long-term disability benefits have been denied in Ontario?
Initially, it is important that you obtain the medical treatment you need. You will be much better off financially if you are able to return to work, rather than having to rely upon obtaining a disability benefit from an insurance company, as such benefits are often delayed or improperly denied, and at best, tend to be around 55-60 per cent of the amount of your prior wages.
Next, you should hire a lawyer with experience handling injury and disability claims, who has a history of taking cases to trial (which many lawyers do not). If your lawyer can’t tell you about any cases they took to trial in the last three to four years, you would probably be better served with another lawyer. If you have further questions, call the lawyers at Michael’s Firm at 647-495-8995. We’re here to help.