What are Long-Term Disability (LTD) Benefits?
Fulfilling personal and financial goals depends largely on one thing – the ability to earn an income. Although it is not something that most people like to think about, imagine how life would change in the event of a major disability.
Where would the money come from to cover everyday necessities like a mortgage, food, clothing, or a child’s education? No one wants to be forced to liquidate their investments, or to sell their home.
A disability should not disable anyone’s financial plan; therefore, the right protection is essential. Fortunately, there is a way to protect your income. The reality is that we are all much more likely to become disabled for at least 6 months before the age of 65 than lose our life.
LTD coverage helps provide you with the security of replacement income while you focus on your recovery and return to work. Long-term disability can bring uncertainty, but imagine the comfort of knowing that although you are unable to work, you can help pay the bills and support your family through your LTD benefits payments.
How are benefits calculated?
LTD benefits payments are based on a specific percentage of your monthly earnings at the time you become totally disabled.
When do benefits start?
Once your claim is approved, payments will be paid from the date the elimination period is completed. The elimination period is 17 weeks, which coincides with the end of government sponsored Employment Insurance and/or short-term coverage.
How long will I receive my disability payments?
You will continue to receive LTD disability payments as long as you are totally disabled. This could be up to the age of 65 or until your retirement, as long as you remain eligible.
Who pays the premiums, and WHY?
We recommend that employees pay the premiums for LTD. Canada Revenue Agency rules require that disability insurance benefits be considered taxable income if an employer has paid any of the premiums. In order to maximize the benefit that employees receive in the case of a disability, they must pay the premiums. This ensures that any benefits received are not taxed.