Long-Term Disability (LTD) Claim Benefits: What They Cover and What They Don’t

Applying for long-term disability insurance benefits is often something people do in the middle of a life-altering event. You’re not planning for it; you’re reacting to it. Maybe an accident threw your life off course, or a chronic illness has finally made it impossible to keep working. Whatever the reason, LTD insurance is supposed to be there to catch you.

And it can be. But it’s also not a cure-all. There are limits, there are gaps, and there are misunderstandings—some of them built right into the policies themselves. Before you file your claim—or while you’re wondering why benefits haven’t kicked in yet—it helps to understand exactly what long-term disability insurance is meant to cover. And, just as importantly, what it’s not.

For a detailed overview of disability insurance basics, the Canadian Life & Health Insurance Association (CLHIA) offers a helpful guide, which serves as a good starting point.

 

The Core Promise of LTD Insurance

Let’s start with what people assume: LTD claim benefits replace your income when you can’t work due to illness or injury. That’s true. Up to a point.

In most group insurance plans, benefits cover around 60 to 70 percent of what you were earning before you had to stop working. That’s the baseline. The definition of “disability” varies from one plan to the next, but for the first two years, many policies define it as being unable to do your own job. After that, the bar shifts—often dramatically—to whether you can do any job you’re reasonably suited for.

 

What LTD Disability Claims Typically Cover

LTD insurance benefits are meant to help you manage essential expenses while you’re unable to perform the essential duties of your job. Here’s what’s usually covered:

 

Income Replacement

Most long term disability insurance policies replace 60% to 70% of your pre-disability earnings. This income is typically paid monthly and begins after a qualifying period, often after short term disability insurance ends (around 17–26 weeks).

Learn more about short-term disability claims here.

 

Partial Disability Benefits

Some policies provide benefits if you can return to work part-time or in a reduced role. This is known as partial disability benefits.

 

Rehabilitation or Return-to-Work Programs

Your insurance company may cover vocational training, physiotherapy, or occupational therapy as part of your return-to-work plan.

 

Tax-Free or Taxable Benefits

Whether your LTD benefits are tax-free or taxable income depends on who pays the premiums:

• If you paid the premiums with after-tax dollars, your LTD benefits are generally tax-free.
• If your employer pays the premiums, your benefits will be considered taxable income under the Income Tax Act.

This makes it essential to clarify who paid your disability insurance premiums—especially if you’re asking, “Can I claim LTD premiums for tax purposes?”

 

What LTD Insurance Doesn’t Cover

LTD coverage can be fairly generous in some respects and shockingly narrow in others.

 

Short-Term or Temporary Illness

LTD coverage is for long-term disabilities—if your condition is expected to improve quickly, you may need to rely on sickness benefits from Employment Insurance or a short-term disability plan.

 

Pre-Existing Conditions

Many policies exclude claims for medical conditions you had before your coverage began, unless you’ve passed a specific waiting period without treatment or symptoms.

 

Lack of Objective Medical Evidence

Your claim must be supported by medical documentation, such as an attending physician’s statement, diagnostic tests, and reports from your healthcare provider. If your insurer believes your condition isn’t “objectively verifiable,” they may deny your claim.

 

Failure to Follow Treatment

If you’re not following prescribed treatment plans or attending medical appointments, your insurance provider may argue that you’re not doing your part to recover—and deny or discontinue your benefits.

 

Non-Covered Medical Conditions

Some insurance policies specifically exclude certain conditions like self-inflicted injuries or chronic pain without clinical evidence.

 

Common Questions About LTD Benefits

Can I claim LTD premiums on my taxes?

It depends. If you pay your disability insurance premiums with after-tax income, you generally cannot claim them. However, if you’re self-employed and your plan qualifies, some business expenses may be deductible. Consult a tax professional to understand your tax implications under the Income Tax Act.

 

Can I collect other benefits while on LTD?

In some cases, yes. You may be eligible for:

• Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) disability benefits
• Critical illness insurance
• Ontario Disability Support Program (ODSP) if you meet the criteria

However, your LTD insurance provider may offset your LTD benefits by the amount you receive from these sources.

 

How long do LTD benefits last?

Typically, LTD benefits last until age 65 or until you’re deemed capable of returning to work. However, insurers often reevaluate claims after two years, when the definition of “disability” may change from “own occupation” to “any occupation.”

 

What If My LTD Claim Is Denied?

Unfortunately, it’s common for LTD claims to be denied, delayed, or discontinued—especially when dealing with large insurance companies. Denials often stem from:

• Alleged lack of medical evidence
• Disagreements over whether you can perform “any occupation”
• Surveillance or social media monitoring
• Recorded conversations between you and your case manager during the course of your claim that suggest that you have the ability to do many household tasks like housekeeping, childcare and dog walking.  Be aware that most LTD insurance companies are now recording and preparing transcripts of their phone calls with you that they sometimes send to their “medical consultants” to see if you meet the definition of disability in the policy.

 

If your long term disability claim is denied, don’t give up. You have options:

• Appeal the decision internally with your insurer (though success is rare)
• File a legal claim with the help of a trusted long term disability lawyer

 

Contact McNally Gervan for a Free Consultation

You don’t have to face your LTD claim alone. Whether you’re preparing to apply, fighting a denial, or simply need advice, the team at McNally Gervan LLP is here to help.

We offer free consultations and work on a contingency basis—meaning you don’t pay unless we win your case. With years of experience in long-term disability coverage and a deep understanding of what individuals go through after an injury or illness, we are committed to getting you the financial support you deserve.

Contact us today to speak with an experienced disability insurance lawyer.