A Practical Guide to Long Term Disability in Canada

Think of Long-Term Disability (LTD) insurance in Canada as your financial backstop. It’s a type of insurance policy designed to replace a large chunk of your income if a serious illness or injury keeps you from working. Essentially, it provides monthly payments to help you cover your bills and living expenses when you can’t earn a paycheque, offering a crucial lifeline for workers across Ontario.

Your Guide to Understanding Long Term Disability

What would you do if a medical condition suddenly made it impossible to do your job? That’s exactly the scenario Long-Term Disability insurance is built for. When it kicks in, it typically pays between 60% to 85% of your normal salary, giving you a steady income stream during what is almost always a stressful and uncertain time.

For most Canadians, this coverage comes from one of two places: a group benefits package through their employer or a private policy they’ve bought on their own. Group plans are the most common, but keep in mind they’re tied to your job. If your employer runs into financial trouble or shuts down, that coverage could disappear.

How LTD Differs From Government Programs

It’s really easy to get LTD mixed up with other Canadian support programs, but they all play different roles and have their own unique application processes. Getting these differences straight is vital for anyone in the Greater Toronto Area (GTA) and across Ontario who finds themselves unable to work.

• Employment Insurance (EI) Sickness Benefits: This is a short-term federal program that provides financial help for up to 26 weeks. It’s meant for shorter illnesses and often acts as a bridge while you’re in the waiting period for your LTD benefits to start.

• Canada Pension Plan (CPP) Disability Benefits: A federal program for people who’ve paid enough into the CPP and have a “severe and prolonged” disability. This strict definition means your condition must prevent you from working at any job regularly. In fact, most LTD policies will require you to apply for CPP Disability as part of your claim.

• Short-Term Disability (STD): This is usually the first step. STD is an employer-provided benefit that covers the first few weeks or months after you stop working. If your condition doesn’t improve, you’ll then transition from your STD claim to an LTD claim. We cover this in more detail in our guide to short-term disability claims.

The key thing to remember is that LTD is a private contract. It’s an agreement between you (or your employer) and an insurance company. The rules, definitions of disability, and how much you get paid are all laid out in the specific wording of your policy—not in government legislation.

Securing Your Financial Future

Getting a handle on what’s inside your specific policy is the most important first step in protecting your income. While understanding your LTD coverage is crucial, some people also look into how private long term care insurance can help pay for extended in-home care. For now, though, let’s stick to the benefits meant to replace your paycheque when you need it most.

How to Qualify for Long Term Disability Benefits

When you’re trying to qualify for long term disability benefits, everything boils down to one crucial phrase tucked away in your insurance policy: the definition of “total disability.”

Now, that term can be misleading. It doesn’t mean you have to be completely bedridden or helpless. Instead, it’s a specific, contractual standard you have to meet to prove you can no longer work because of your health.

Getting a handle on this definition is the most important step you can take. Why? Because it’s not set in stone. For most policies, the definition actually changes after a set period, creating two distinct phases for your claim. This “moving goalpost” is one of the biggest hurdles people face and a common reason why claims are denied down the road.

The Two Stages of Total Disability

For the first two years of your claim, most Canadian LTD policies operate under what’s known as the “own occupation” definition. This is the more straightforward of the two.

During this initial period, you’re considered “totally disabled” if you’re unable to perform the key duties of your specific job—the one you were doing right before you had to stop working. The focus is entirely on your ability to do that particular role.

Think of a carpenter from Burlington who suffers a serious back injury. If she can’t lift heavy materials, stand for hours, or operate her tools, she can’t do her job as a carpenter. Under the “own occupation” test, her claim would likely be approved because she can no longer perform the essential tasks of her trade.

But after that initial 24-month window, the rules of the game change.

The definition of total disability typically shifts to “any occupation.” This is a much tougher standard to meet. The insurance company is no longer asking, “Can you work as a carpenter?” Instead, they’re asking, “Can you do any job that you’re reasonably suited for based on your education, training, and experience?”

This is where things get complicated. The insurer might argue that the same carpenter, despite her back injury, could now work a desk job as a dispatcher or a customer service representative—even if it pays significantly less. This switch is the point where many legitimate claims are suddenly cut off.

You can learn more about the conditions that typically satisfy these definitions in our detailed guide on what qualifies for long term disability in Ontario.

The Power of Medical Evidence

No matter which definition applies to you, the success of your claim rests on one thing: solid, consistent medical evidence. The insurance adjuster has never met you and hasn’t seen your daily struggles firsthand. They can only make a decision based on the documents you provide.

While your family doctor’s support is absolutely essential, reports from specialists often carry the most weight, especially for conditions that aren’t easily seen on an X-ray or a scan.

Many different health issues can form the basis of a disability claim. The key is providing objective proof from the right medical professionals.

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Common Qualifying Conditions for LTD in Canada

This table highlights some of the medical conditions frequently approved for LTD benefits in Canada, organized by category. Seeing where your condition fits can help you understand what kind of medical evidence is usually required.

Category	Examples of Conditions
Musculoskeletal Disorders	Chronic Back Pain, Fibromyalgia, Osteoarthritis, Degenerative Disc Disease
Mental Health Conditions	Major Depressive Disorder, Generalized Anxiety Disorder, PTSD, Bipolar Disorder
Neurological Conditions	Multiple Sclerosis (MS), Parkinson’s Disease, Stroke, Traumatic Brain Injury (TBI)
Chronic Illnesses	Crohn’s Disease, Lupus, Rheumatoid Arthritis, Chronic Fatigue Syndrome
Cardiovascular Issues	Congestive Heart Failure, Coronary Artery Disease, Post-Heart Attack Limitations

This isn’t an exhaustive list, but it gives you a good idea of the kinds of diagnoses insurers regularly see. The key is always to back up your diagnosis with strong medical documentation.

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In fact, mental health and musculoskeletal conditions have become the leading drivers of LTD claims across Canada. According to a major Canadian insurer, mental health issues account for a staggering 30% of all claims, with musculoskeletal problems making up another 21%.

If your disability is related to your mental health, it’s absolutely critical to show you are actively engaged in treatment. Things like regular appointments for counselling for depression not only help you on your path to recovery but also create the paper trail your insurer needs to see. It demonstrates that you’re doing everything you can to manage your condition.

Ultimately, your ability to get the benefits you deserve hinges on proving your case with clear, comprehensive medical records that line up perfectly with your policy’s definition of total disability.

Your Step-by-Step Application Guide

When you’re already dealing with a health condition, the last thing you want to do is tackle a mountain of paperwork. But that’s exactly what applying for long-term disability can feel like. The key is to break it down into manageable steps. Think of it less like filling out forms and more like building your case, piece by piece, to show the insurer why you need support.

The whole process kicks off the moment you realize you can no longer work. Your first move is to let your employer know and ask for the long-term disability application package. This package is the foundation of your claim and usually has three key parts.

The Three Pillars of Your Application

Your application is essentially a three-part story, and it’s crucial that every part tells the same story. Insurance adjusters are trained to spot inconsistencies, so making sure all the details line up is one of the most important things you can do.

Here’s what you’ll be working with:

1. Claimant’s Statement: This is your chance to tell your side of the story. You’ll describe, in your own words, how your condition affects your ability to work and even just get through a normal day. Be specific. Don’t just say you’re in pain; explain how that pain stops you from sitting at a desk or lifting a box.
2. Employer’s Statement: Your employer fills this part out. It covers the basics of your job—your title, duties, salary, and your last day of work. It’s a good idea to get a copy of your official job description to make sure what they submit is accurate.
3. Attending Physician’s Statement (APS): This is the heavyweight of your application. Your doctor needs to provide the hard medical evidence that backs up your claim. This statement will detail your diagnosis, your prognosis, and, most importantly, the specific functional limitations that prevent you from working.

A classic mistake is a mismatch between your statement and your doctor’s. For example, you might write that you can’t sit for more than 15 minutes, but if your doctor’s report doesn’t mention that specific limitation, the insurer might doubt the severity of your condition. This is why having an open, detailed conversation with your doctor is absolutely essential.

Gathering Your Essential Documents

Getting organized before you even touch the application forms will save you a world of headaches later on. When you have all your documents ready, you can build a much stronger, more complete case right from the start.

This flowchart shows how an insurer’s perspective on “disability” often shifts over time—from being unable to do your own job to being unable to do any job.

This is a critical point to understand because it’s why some people who are initially approved find their benefits cut off after the two-year mark. The definition of disability gets a lot tougher.

To put your best foot forward, start gathering these items:

• A copy of your group benefits booklet: This is your policy’s rulebook. You need to know what it says.
• Your official job description: This clarifies exactly what your job demanded of you.
• A complete list of all your doctors and specialists: Make sure you have their names, addresses, and phone numbers handy.
• Copies of key medical records: Think specialist reports, MRIs, X-rays, or hospital discharge summaries.

The goal here is to paint a complete and undeniable picture for the insurance adjuster. You want to leave them with no questions or doubts about how your medical condition has made it impossible for you to do your job.

Managing Timelines and Expectations

Once you’ve submitted your completed application, the waiting game begins. In Ontario, you can generally expect a decision within 30 to 60 days. That said, this timeline can stretch out if the insurer needs more medical information or decides to send you for an Independent Medical Examination (IME).

It’s a stressful wait, but try to be patient. The insurance company is doing its homework. And if the news isn’t what you hoped for, remember that a denial is not the end of the road. Often, it’s the starting point for the next phase, which is getting advice from a lawyer for your insurance claim to figure out your options and protect your rights.

Common Reasons Insurers Deny LTD Claims

Getting a denial letter for your long-term disability claim can feel like a punch to the gut. You’re already juggling a serious health condition, and now the financial safety net you thought you had has been pulled out from under you. It’s natural to feel defeated, but it’s critical to know that an insurer’s first “no” is rarely the final answer.

Insurance companies are businesses, plain and simple. Their goal is to protect their bottom line, and unfortunately, that sometimes means denying legitimate claims. Understanding why your claim was turned down is the first step in fighting back and getting the support you need. While every situation is different, most denials in Ontario boil down to a few common reasons.

Insufficient Medical Evidence

This is, by far, the most frequent reason insurers give for denying a claim. The adjuster will often say your file lacks “objective evidence” of a disability. This is a huge hurdle for people with conditions that don’t neatly show up on an X-ray or MRI, like fibromyalgia, chronic pain, depression, or anxiety.

The insurance company isn’t necessarily saying you aren’t sick. Instead, they’re arguing that there isn’t enough concrete medical proof to show that your symptoms stop you from being able to work. They want to see a clear, well-documented line connecting your diagnosis to your inability to do your job. Without that consistent and detailed reporting from your doctors, they have an easy out.

Disagreement with Your Doctor’s Opinion

It’s incredibly frustrating, but it happens all the time: the insurance company simply disagrees with your own doctor. They will have their in-house medical consultants—doctors who have never met you, spoken to you, or examined you—review your file and come to a different conclusion.

Suddenly, your family doctor or specialist, who has guided your treatment for months or years, is being second-guessed by a physician on the insurer’s payroll. These consultants might suggest you can handle a modified version of your job or even a completely different one, directly contradicting the medical advice you’ve been following.

It’s a classic tactic used to weaken your claim. The insurer is essentially swapping their paid consultant’s judgment for your own doctor’s, putting the burden on you to prove that your medical team is right.

Video Surveillance and Social Media

Yes, they really do this. Insurers often hire private investigators to watch and film people who have filed for disability. An investigator might follow you to the grocery store or a doctor’s appointment, hoping to catch a few seconds of footage they can use against you.

That one clip of you lifting a bag of groceries can be spun into “proof” that you can handle the physical demands of your job. They’ll also dig through your social media profiles, looking for anything that contradicts your claim. A single photo of you smiling at a family BBQ could be used to argue your depression isn’t as debilitating as you say. These tactics feel invasive, but they are legal in Canada and used regularly to justify denials.

Your Two Options After a Denial

When you get that denial letter, you’re at a crossroads. You have two main paths forward, and the one you pick can make all the difference.

1. The Internal Appeal: The insurance company will invite you to appeal their decision internally. This means you send them more medical information and ask them to take a second look.
2. Starting a Legal Claim: This path involves hiring a disability lawyer who files a lawsuit against the insurance company for you.

An internal appeal might sound like the easier, less stressful route, but it’s often a trap. You’re playing the game on their turf, by their rules. They can drag the process out for months, only to deny you again. More importantly, there’s a strict legal clock ticking in the background. In Ontario, you typically have two years from the date of denial to file a lawsuit. If you miss that deadline because you were tied up in an internal appeal, you could lose your right to sue for good. To better understand your options when your long term disability has been denied, getting professional advice is key.

That’s why speaking with an experienced disability lawyer in Ontario right after a denial is almost always the smarter move. A lawyer can protect your legal rights from day one, handle all the stressful back-and-forth with the insurer, and start building the strongest case possible to get you the benefits you deserve.

Appealing a Denied Claim in Ontario

Getting a denial letter for your long-term disability claim can feel like hitting a brick wall. It’s frustrating and disheartening, but it’s crucial to know that this isn’t the end of the road. In fact, this is often the point where taking decisive legal action becomes your most powerful move.

For many people in Ontario, filing a lawsuit is the most effective way to secure the benefits they are rightfully owed. It might sound daunting, but understanding how the process works can make it feel much more manageable.

The first step is having your disability lawyer file a Statement of Claim. This is the formal document that kicks off the lawsuit. It lays out the facts of your case, explains why the insurer’s denial was unjustified, and specifies the compensation you’re seeking.

Once this claim is filed, the dynamic shifts immediately. The insurance company can no longer ignore you. Their in-house legal team takes over from the claims adjuster, and they are legally required to respond. This simple act levels the playing field and puts you in a much stronger position.

Understanding the Legal Process

After the initial paperwork is filed, your case moves into a phase called the discovery process. This is simply a structured way for both sides to share all the relevant information and evidence they have. The goal is to make sure there are no surprises down the line if the case were to head to a trial.

During discovery, you’ll provide the insurer with your complete medical records. In return, they have to give you their entire claim file. This includes all the internal notes, emails, and reports from the medical consultants they hired to review your case. This exchange is absolutely critical; it allows your lawyer to see exactly why you were denied and to build the strongest possible counter-argument.

Your Lawyer as Your Advocate

Throughout this journey, your disability lawyer is your shield and your spokesperson. They handle all communication with the insurance company, which means no more stressful phone calls or confusing letters from adjusters. You can finally focus on your health.

Here’s what a good lawyer will do:

• Manage all communications: Every letter, email, and phone call is filtered through your legal team.
• Gather powerful evidence: They will work with your doctors and often hire independent medical experts to provide reports that reinforce the reality of your condition.
• Negotiate from a position of strength: With a solid case built on compelling evidence, your lawyer will negotiate with the insurer’s legal team to get you a fair settlement. The vast majority of these cases are resolved this way, long before a courtroom is ever needed.

The real objective is to negotiate a settlement that acknowledges the severity of your disability and gives you the financial security you need. When a lawyer gets involved, it sends a clear signal to the insurer: you are serious about defending your rights.

The reality is that managing a disability while trying to hold down a job is incredibly challenging. A recent Canadian survey found that employees with more severe disabilities have an average job tenure of just 48.3 months. This is a stark contrast to the 75.7 months for those with less severe conditions. These numbers highlight just how necessary long-term disability benefits are, and you can explore more about these employment tenure statistics to see the bigger picture.

What Compensation Can You Pursue?

When you file a lawsuit, you’re not just asking for your monthly payments to be turned back on. You have the right to seek a comprehensive settlement that covers everything you’ve lost.

This usually includes:

• Retroactive Benefits: A lump-sum payment to cover all the monthly benefits the insurer should have been paying you since the day they denied your claim.
• Reinstatement of Benefits: An agreement that the insurer will resume your monthly benefit payments going forward.
• Aggravated and Punitive Damages: In situations where the insurer’s conduct was especially unfair or handled in “bad faith,” you may be entitled to extra compensation for the emotional and mental distress their actions caused.

Worried about the cost? You shouldn’t be. Most experienced disability lawyers in Ontario work on a contingency fee basis. This means you pay absolutely nothing upfront. Their fee is simply a percentage of the settlement you receive, so they only get paid if they win your case. This approach ensures that everyone has access to justice, regardless of their financial situation.

How Your LTD Payout Is Calculated with CPP and Other Benefits

When your long-term disability claim is approved, it’s easy to assume the monthly benefit listed in your policy is what will land in your bank account. The reality is often quite different. Your LTD benefits don’t operate in isolation—they’re part of a bigger picture that includes other Canadian income sources, and these interactions can significantly change your final payment.

Getting a handle on how these programs work together is absolutely essential for planning your finances when you can’t work. The most common and important interaction is with the Canada Pension Plan (CPP) Disability program.

What Does “Offset” Really Mean for Your LTD?

Buried in the fine print of nearly every private long-term disability policy is a critical clause about “offsets” or “deductible sources of income”.

Think of it this way: your LTD policy promises to get you to a certain total monthly income, not to pay that entire amount itself. It allows the insurer to subtract—or “offset”—any money you get from other specific programs.

The insurance company’s goal is to reduce its own payout by having government programs, like CPP Disability, shoulder some of the financial load. This is why your LTD insurer will almost certainly insist that you apply for CPP Disability. In fact, refusing to apply can give them grounds to estimate what you would have received from CPP and deduct it anyway, or even stop your payments altogether.

Let’s see how this plays out with a simple example:

• Your LTD policy is supposed to pay you $3,500 per month.
• You apply for CPP Disability and are approved for a $1,200 monthly benefit.
• Your LTD insurer then subtracts that $1,200 from the amount they owe you.

The result? The insurance company pays you $2,300, and CPP pays you $1,200. You still get your total $3,500, but it comes from two different places. This is a standard, legal practice across the industry. Our guide on how to apply for CPP Disability can walk you through that crucial process.

To make this clearer, let’s look at a table.

LTD Benefit Offsets Example Calculation

Income Source	Amount Before Offset	Amount After Offset
LTD Policy Entitlement	$3,500	$2,300 (from insurer)
CPP Disability Benefit	$0	$1,200 (from government)
Total Monthly Income	$3,500	$3,500

As you can see, your total income remains the same, but the source of the funds changes. The insurer’s portion is “offset” by the government benefit.

LTD vs. WSIB: A Crucial Difference

Another common source of confusion is the relationship between Long-Term Disability and the Workplace Safety and Insurance Board (WSIB) in Ontario. While both provide income support when you can’t work, they are designed for completely different situations and you can’t receive both for the same disability.

The distinction is straightforward:

• WSIB is only for injuries or illnesses that are a direct result of your job. If you slip on a wet floor at work and injure yourself, that’s a WSIB claim.
• LTD covers disabilities from any other cause. This could be a chronic illness, a mental health condition, or an injury from a weekend car accident.

Your LTD policy will always list WSIB as an offset. Since WSIB benefits are often more generous for work-related injuries, they essentially take priority, and you would not receive LTD payments for the same condition.

Understanding these benefit interactions is vital because they directly impact your financial survival. With disability poverty in Canada at alarmingly high levels, knowing how to secure your full entitlement from every available source is more important than ever.

The statistics paint a grim picture. In Canada, 16% of people with disabilities live in poverty—a rate nearly double that of their non-disabled peers. These numbers underscore why it’s so critical to access every dollar you are entitled to. You can learn more from these disability poverty statistics.

We Get Asked This a Lot: Your Long Term Disability Questions Answered

When you’re dealing with a long-term disability, you’re bound to have questions. It’s a confusing and stressful time, and getting clear, straightforward answers is crucial. Here, we tackle some of the most common concerns we hear from people in Ontario.

Can my employer fire me while I’m on long term disability?

This is a big one, and the short answer is no. Your employer can’t fire you just because you’re on an approved disability leave. Your job is protected under Ontario’s Human Rights Code, which prevents discrimination based on a disability.

That said, this protection isn’t a blank cheque for life. If it becomes medically certain that you will never be able to return to work for your employer in any capacity, the legal relationship can become what’s called “frustrated.” This is a tricky area of law that essentially ends the employment contract, so it’s vital to get legal advice before assuming anything about your job security.

Do I have to pay tax on my long term disability benefits?

Whether or not you pay tax on your LTD benefits comes down to a simple rule: whoever paid the insurance premiums.

• Employer-Paid: If your employer paid 100% of the premiums for the plan, then yes, your benefits are considered taxable income in Canada.
• Employee-Paid: If you paid 100% of the premiums yourself (with your after-tax dollars), your benefits are completely tax-free.
• Cost-Shared: If you and your employer split the cost of the premiums, only the portion of the benefit that your employer paid for is taxable.

Your benefits booklet or HR department should have the specific details for your plan. It’s worth checking, as this makes a big difference to your take-home pay while you’re off work.

Can the insurance company make me go back to work?

No one can physically force you to show up at your job. But what the insurance company can do is cut off your benefits if they believe you no longer meet the policy’s definition of being totally disabled.

It’s common for insurers to push people towards a gradual return-to-work program, sometimes even when their own doctor says they aren’t ready. If you refuse to participate based on medical advice, the insurer might use that as a reason to stop your payments. This is where many disputes begin, putting both your health and your financial stability at risk.

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If your claim has been denied or you feel like the insurance company is pressuring you unfairly, you don’t have to face them on your own. As a firm based in Burlington and serving all of the GTA and Ontario, the experienced team at UL Lawyers knows the tactics insurers use and is ready to stand up for you. Contact us for a free consultation to protect your rights and get the benefits you’re entitled to.