10 Things to Look for in a Long-Term Disability Insurance Policy in Alberta

Life can be unpredictable, and a sudden illness or injury can turn everything upside down. If you live in Alberta, having a long-term disability (LTD) insurance policy can provide financial stability and peace of mind during tough times. But with so many policies out there, how do you know which one is right for you? In this article, we’ll break down some of the key things to look for in an LTD insurance policy so you can make an informed decision that suits your needs. If you still have questions, our long-term disability lawyers can assist.

1. Understand What Long-Term Disability Insurance Covers

Before diving into the specifics of an LTD policy, it’s important to know what this type of insurance is meant to cover. LTD insurance provides income replacement if you’re unable to work due to a serious illness or injury. It’s designed to help you manage your expenses—like rent, groceries, and bills—while you’re recovering or adjusting to a new way of life.

In Alberta, LTD insurance usually kicks in after short-term disability benefits or sick leave from work runs out. There are also government sources of support in case you cannot work for medical reasons, such as federal employment insurance (EI). Policies can vary, but most will replace a portion of your normal income—typically around 60-70%. Knowing exactly what the policy covers is a crucial first step.

2. Look at the Definition of “Disability”

The way “disability” is defined in your policy will determine whether or not you qualify for long-term disability benefits. There are two main types of definitions to watch for:

Own Occupation Coverage:

Any Occupation Coverage: This means you’ll only receive benefits if you’re unable to work in any job. These policies are often stricter and harder to qualify for, so it’s something to keep in mind when comparing options. Since LTD benefits are based on a percentage of income, the “any occupation” definition nearly always leads to lower payments as your ability to do more jobs (including ones paying less than your current job) is considered.

Most policies will combine both definitions but the length of time before the “change of definition” may vary.

3. Understand How the Benefit Amount Is Calculated

One of the most important things to consider is how much income the policy will replace if you’re unable to work. Most LTD policies in Alberta cover between 60% and 70% of your pre-disability earnings. While this does not replace your full pay cheque, it’s usually enough to cover essential living expenses.

Make sure you understand how the benefit amount is calculated. Some policies base it on your gross income (before taxes), while others use your net income (after taxes). The difference can have a significant impact on your monthly benefit amount.

Some LTD policies can also be considered taxable income while others don’t require you to report the disability benefits as income. This generally depends on whether your LTD premiums are paid by after-tax income or before-tax income by your employer.

4. Understand the Waiting Period

Long-term disability insurance policies generally include a waiting period—the amount of time you must be disabled before your benefits start. After you have submitted everything necessary for your LTD claim, you may have to wait up to six weeks before you receive benefits or are notified of a decision on your claim and this amount of time can vary by policy. This length of time can depend on how complex the claim is and how much evidence is involved in the application.

During the waiting period, you’ll need to rely on other sources of income, like short-term disability benefits, EI, or personal savings. Make sure the waiting period lines up with your financial situation.

5. Review the Length of Coverage

Another key feature to look at is how long the policy will pay benefits. This can vary depending on the insurance company, but typically a standard benefit period is until the age of 65.

If you’re looking for long-term financial security, make sure the policy you choose provides benefits for as long as you need them. Shorter coverage periods might save you money on premiums, but they won’t offer the same level of protection.

6. Consider Coverage for Pre-Existing Conditions

If you have a pre-existing medical condition, it’s important to check how this may impact your coverage under the policy. Some LTD policies in Alberta may not cover disabilities caused by conditions you already had before signing up. Others might include a waiting period specifically for pre-existing conditions, meaning you’ll need to be covered by the policy for a certain amount of time before those conditions are eligible for benefits.

Make sure you’re clear on how the policy treats pre-existing conditions, especially if you have a history of health issues.

7. Look at the Premium Costs

The cost of LTD insurance ranges widely depending on factors like your age, occupation, health, and the level of coverage you choose. While it might be tempting to go for the cheapest option, remember that lower premiums often come with fewer benefits or stricter conditions.

Instead of focusing solely on the price, look for a policy that offers good value for money. A slightly higher premium might be worth it if it means better coverage and peace of mind.

8. Examine Policy Exclusions

Every LTD policy will have exclusions—situations where benefits won’t be paid. Common exclusions include (but are not limited to):

Disabilities caused by self-inflicted injuries;
Disabilities related to criminal activities, and;
Disabilities arising from pre-existing conditions (see above).

It’s essential to read the fine print and understand what’s not covered. This way, you won’t face any surprises if you need to file a claim.

9. Check for Additional Benefits or Features

Some LTD insurance policies come with extra features beyond the basic income replacement that can be incredibly helpful. These might include:

Rehabilitation Programs: Assistance with retraining or preparing for a new job if you can’t return to your old one
Partial Disability Benefits: Payments if you can work part-time but not full-time
Cost of Living Adjustments: Increases in your benefits to keep up with inflation
Survivor Benefits: Payments to your family if you pass away while receiving benefits

These additional features can add value to your insurance policy and provide extra support during challenging times, although insurers generally charge higher premiums for policies with these features than policies without them.

10. Understand the Claims Process

The claims process can vary among insurance providers, so it’s important to know what to expect. Look for a policy with a straightforward claims process and clear requirements. Some things to consider are:

How to file a claim (e.g., obtain a copy of the claim application form from either your human resources representative or directly from the insurer’s website);
What documentation is needed (e.g., medical records), and;
How long it typically takes to receive benefits.

Reading reviews of insurance companies or talking to others with the same insurer can help you gauge how easy it is to work with them during the claims process.

Focus on the Key Factors of LTD Insurance

Choosing the right long-term disability insurance policy in Alberta can seem overwhelming, but it doesn’t have to be. By focusing on key factors like coverage details, benefit amounts, waiting periods, and exclusions, you can find a policy that meets your needs and gives you peace of mind. Take the time to compare your options, ask questions, and read the fine print. With the right policy in place, you’ll be better prepared to face life’s unexpected challenges.

Contact Our Alberta Long-Term Disability Lawyers

Understanding how each type of disability benefit could impact your life is often complicated. These policies differ on when benefits are available as well as how long they last. If you don’t understand the policy and become disabled, the insurance company’s position may seem confusing. Our experienced disability lawyers are here to answer your questions related to your LTD claim.

At Preszler Injury Lawyers, we approach every claim with one goal: recovering the benefits our clients deserve. We are experienced in every aspect of the process, from reviewing the viability of a claim, to taking insurance companies to court.

We believe our comprehensive approach puts us in the strongest position to advocate for our clients. Call now to schedule a free initial consultation with our legal team. Our toll-free line at 1-888-494-7191 is always staffed and ready to hear from you.