Personal Finance

Insurance - Long Term Disability

  • Last Updated:
  • Nov 13th, 2014 7:57 pm
[OP]
Newbie
Jul 30, 2016
11 posts
2 upvotes
Calgary, AB

Insurance - Long Term Disability

In a few months time I will be traveling to Australia for a 6 month long vacation. This vacation will force me to quit my job and leave the employer sponsored benefit plan I currently have. I will have no issue obtaining Travel insurance or basic Health Insurance (in case for some reason I develop an illness that requires prescription meds when returning home to Canada). My issue is I’m having trouble obtaining Long Term Disability Insurance. I spoke to an insurance representative and he told me that I would essentially be quitting my job and not actively working and therefore would not qualify for Long Term Disability Insurance. He tried to convince me to get Critical Illness insurance which would give a one time payout (equivalent to about 2 yrs salary) if you developed cancer, heart condition etc. He also suggested Long Term Care insurance which would pay out $4000/month if I was incapacitated to the point where I could not perform daily care by myself. I’m mostly thinking about if I hurt my back or disable myself in some way that allows me to function through daily life but prohibits me from working full time and affecting my future earning potential. Is there really no choice but to go without insurance on future earning potential or was the representative I was speaking with wrong?

Very much appreciate any insight from those with insurance knowledge out there,

-J
8 replies
Deal Addict
Aug 19, 2013
2397 posts
1008 upvotes
I think they are correct. Long term disability is to protect you if you lose you job. You won't have a job so there is nothing to replace.
Sr. Member
Dec 4, 2004
547 posts
257 upvotes
GTA
LTD is like EI. It protects you from loss of income if you are unable to work due to illness or injury. You can not have LTD insurance if you do not have a job.
Deal Expert
Aug 22, 2011
28040 posts
13855 upvotes
Ottawa
No longer part of the company, no longer part of the group plan...so no benefits!
Jr. Member
Oct 10, 2014
176 posts
27 upvotes
Toronto, ON
Momof3cuties wrote:
Nov 13th, 2014 2:28 pm
I think they are correct. Long term disability is to protect you if you lose you job. You won't have a job so there is nothing to replace.
not really true. Disability protects you if you are no longer able to meet the work and income requirement defined under the policy. that being said, you must be employed and have an insurance need at time of purchase of the coverage.
Jr. Member
Oct 10, 2014
176 posts
27 upvotes
Toronto, ON
_dc_ wrote:
Nov 13th, 2014 2:49 pm
LTD is like EI. It protects you from loss of income if you are unable to work due to illness or injury. You can not have LTD insurance if you do not have a job.
some association plan would allow someone to be off for 6 months and continue coverage. some individual coverage also.

OP i am pretty sure you would still be covered under CPP's disability coverage, but the disability definition is more stringent
Deal Addict
User avatar
Nov 17, 2004
2280 posts
596 upvotes
How can you expect to get disability insurance, which is based on a percentage of your income if you have no income?
Jr. Member
Oct 10, 2014
176 posts
27 upvotes
Toronto, ON
CensoredByRFD wrote:
Nov 13th, 2014 5:05 pm
How can you expect to get disability insurance, which is based on a percentage of your income if you have no income?
individual policies can be for a fixed amount, which is based on income at time of purchase, and not a % of income at disability.
Deal Addict
User avatar
Nov 17, 2004
2280 posts
596 upvotes
jfroland wrote:
Nov 13th, 2014 6:39 pm
individual policies can be for a fixed amount, which is based on income at time of purchase, and not a % of income at disability.
Interesting. Which companies specifically offer that?

When I got my insurance policies, my broker helped me look into disability insurance, but it wasn't worth it as a sole proprietor. If I was to try and match my actual income, I would have to pay an arm and a leg based on my current income and if I had to make a claim, they would then reaudit to see what my current income is pay on that. Now my company is incorporated and I'm on payroll, but I've still decided to not get it since due to the nature of my job and position, even if I can't work, my company will continue to make money..

If I don't have to have an income or proof of income to get disability insurance, what's to stop me from saying that I make $500k a year doing IT work or something, taking out a policy, and then breaking all my fingers or something and saying that I can't do my job effectively because I can't pay, and then collecting on the policy?

Top