You may be wondering what the difference is between an any-occupation policy and a regular- or own-occupation policy. An any-occupation long-term disability insurance policy is one where you only receive benefits if you are unable to perform the tasks required for any job for the skills and experience you possess. Conversely, a regular- or own-occupation long term-disability (LTD) policy is one where you may receive benefits if you are unable to do the primary tasks required for your regular job.
Employers may offer either type of LTD insurance as part of their group policy. However, it is important to note that when an employer offers a regular- or own-occupation LTD policy as part of their group policy, the definition for disability typically changes—often after two to five years—to an any-occupation definition. When the definition of disability changes, you must prove that you are unable to do the work required for any job in order to continue receiving your disability benefits.
There are LTD policies available where the definition never changes—policies that permanently follow the own-occupation definition of disability. However, those are usually only available if you purchase them individually.
If you earn a high income in your current role, you may want to consider purchasing one, as changing to a different career if an injury or illness disables you may result in a significant decrease in pay.
Another reason why purchasing your own policy may be beneficial is because of the tax ramifications. If your employer pays all or even part of your premiums, any disability you receive after your illness or injury may be subject to taxes.
However, if you pay all of your premiums on your own, as you would if you purchase your own LTD policy, any disability benefits you receive through the policy may be tax-free. Because every LTD disability policy typically only pays between 60 to 70% of your regular pay, receiving your disability income tax-free may bring your disability payments closer to your regular take-home pay, which, again, may be beneficial if you earn a high income.
Other Types of Insurance You May Be Eligible to Receive
There some other types of disability coverage that you may be eligible to claim if you paid into these policies, such as the Canada Pension Plan (CPP).
However, it is important to note that you may only receive up to 85% of your regular income through your LTD disability policies, even if you have coverage under multiple policies. In fact, if you start receiving compensation through other insurance policies, your LTD insurance provider may actually lower the benefits you are receiving through their policy.
Questions to Ask an Insurance Agent
If you are considering purchasing an insurance policy, there are a number of questions you should ask the insurance agent, including:
- How the policy defines disabled
- How quickly you may receive benefits if you become disabled
- Whether you may have to continue paying your premiums after you are disabled
- Whether the definition for disabled changes
- Whether you may increase your coverage without providing further proof of disability
- Whether your disability income may be subject to taxes
Denial of Disability Benefits
It is important to be aware that the denial rate for disability benefits is high. While we do not know the denial rate statistics for the private insurance companies that offer LTD coverage, CPP’s denial rate is approximately 60%, one of the highest denial rates in the world, according to a report from the Huffington Post. It stands to reason that the denial rate would be as high or higher for private insurance companies.
We do not tell you this to discourage you from purchasing disability coverage. We just want you to be aware in case you, or someone you know, receive a denial letter when you believe that you or they are qualified. We also want to reassure you that many people who today regularly receive disability payments started by receiving a denial letter.
Just as denial rates are frequent, though, so is the decision by many to appeal their denials. That said, the appeals process is highly complex, and there are multiple avenues you could take with your appeal. A disability lawyer understands the insurance jargon, appeals process, and contracts that many Canadians hold with the insurance companies. They may offer you guidance on which route suits your situation. Keep in mind, as well, that there are limits on the amount of time you have to take specific courses of action in the appeals process.
A disability lawyer may help you understand the time constraints and offer legal advice, so you understand all your options. They may also help explain the difference between an any-occupation policy and a regular- or own-occupation policy.
If you are feeling frustrated and overwhelmed just thinking about filing an appeal after your insurer has denied your claim, or if you know someone who is, contact the team at Preszler Injury Lawyers today. We offer a free initial consultation and are happy to review your case. Call us today at (416) 364-2000.