Long-term disability insurance part 1: the basics
By AdvocateDaily.com Staff
In part one of a four-part series on long-term disability insurance, Toronto personal injury and disability lawyer Nainesh Kotak explains some of the lesser-known facts about applying and qualifying for benefits.
Kotak, principal of Kotak Personal Injury Law, says few people give much thought to their LTD coverage until a medical condition renders them unable to work.
While most LTD insurance plans are group policies provided by employers, Kotak explains that they can also be purchased privately.
“We tend to see more litigation in the group policy realm than the private ones, which are often issued to professionals and executives, and where insurance companies seem to pay out more readily,” he says.
Each policy will set its own definitions, coverage and benefit rates, usually based on a percentage of the holder’s income. However, Kotak says the typical policy breaks down into two parts:
For the first two years, policyholders are covered as long as they can convince their insurers that they are unable to perform the duties of their own job as a result of their disability.
But the test shifts at the two-year mark, requiring them to show that they are totally disabled from performing any type of work in order to continue receiving benefits.
“That’s a harder test to meet,” says Kotak, who explains that workers may be required to perform different work from their original duties, so long as they are qualified for it in terms of education, skills or experience.
For example, he says a person physically disabled by an injury at work may be able to perform lighter work or sedentary tasks.
In general, Kotak says applicants are most likely to retain entitlement to LTD benefits for more than two years if there is both a physical and psychological element to their injuries.
Following an accident or the onset of a medical condition, Kotak says most employees will start out on their employer’s short-term disability plan. However, when the time comes to apply for LTD benefits, he says they will need to complete three key forms:
- Applicant’s statement: The insured person describes their situation and disability in this document in their own words.
- Employer’s statement: This document includes information such as the worker’s last day of work, salary, job duties and title.
- Physician’s statement: Most crucially, the applicant’s treating doctor details the person’s diagnosis, prognosis, as well as any medications they are already taking.
From there, Kotak says the focus switches to the insurer, which will make its own adjudication about whether the application has met the test for disability.
Stay tuned for part two where Kotak will discuss what individuals should do when faced with a denial by their insurer.