Personal Finance

Mandatory Long Term Disablity insurance - is that lawful?

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  • Feb 22nd, 2018 9:49 am
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Newbie
Oct 19, 2016
1 posts
FlyingOctopus wrote:
dutchca wrote: It is unfortunate the employer doesn pay for the benfit program 100%, then you wouldn't be in this situation.
Actually, it's a much better idea that the employer doesn't pay the LTD premiums.

If they are paid 100% by the employee the benefits aren't taxable. If any part of the premiums are paid by the employer the benefits are taxable.


And since LTD benefits are usually around 50-60% of your salary, if you need to be on them for a while (as I did) it much better that they aren't taxable. If I was receiving only to 50-60% of my salary and had to pay tax on this, I would have had serious financial difficulties on top of the serious medical condition I was already dealing with.

My company is switching to employee paid LTD premiums for exactly the reason Flying Octopus describes. That non-taxable benefit sounds great but, as with all insurance policies, I'm skeptical. The devil is in the details, the fine print? How difficult is it to make a claim? FlyingOctopus, any insight into this?
Member
User avatar
Nov 18, 2015
320 posts
163 upvotes
Toronto, ON
it is quite difficult to be approved for LTD. in some cases, by the time all the documentation, applications and supporting documents have been submitted, reviewed and approved you've already started back to work.

But i have seen people reaping the benefits of LTD for the remainder of their career and is probably grateful that the benefit was there in the first place!

It's like any other form of insurance.
Deal Fanatic
Nov 22, 2015
7849 posts
8798 upvotes
taylor192 wrote:
FlyingOctopus wrote: Or I can just poke potential holes in your math. :)

It's not clear to me want you meant, but your claim that you only have a 3% chance to be disable is only for one year. (Which may be what you meant). Over a number of years your chance to be disabled for some period of time should be larger than 3%.

The reasoning being is that there is going to be some churn in who is disabled. While some people who newly become disabled as an adult under 45 will stay disabled for life, many of them will only be disabled for a short period of time. Meaning other adults under 45 will have to become disabled for a short period of time to keep the 3% annual average.

So over a 10 to 20 year period your chance of being disabled for some period of time is going to be large than 3%. I don't believe there is enough data in either report to give a good estimate as to what.

As well, your 3% estimate assumes that all of those who are reported as disabled in the earlier age group are permanently disabled. Some of them won't be, meaning your estimate needs to be adjusted higher, although once again I don't believe there is enough data to say how much higher.
Now it is my turn to poke holes in your math.

Its like flipping a coin. Each flip has the same probability, it does not grow over time (< 45yo to minimize the factor of age).

Using your math and logic, you assume everyone is "due" to be disabled at some point in time, when in reality the "churning" you reference is highest among a smaller percentage of the population.
Lol.. nice "math"

Terrible analogy. Let's say you flip a coin each year. If you flip tails you become disabled. Sure it's a 50/50 chance. What's the chance of you getting heads twice in a row? 3 times? 40 times? You've got about 1% chance that you won't flip a tails in 40 tosses.
Banned
User avatar
Jun 8, 2008
3977 posts
1423 upvotes
Toronto
My LTD benefits are also mandatory, but disability insurance is only costing me $20/month. My complete health care benefits package costs me more. Are you sure the $800/year is *just* for disability and not part of a bigger benefits package?
Member
User avatar
Nov 18, 2015
320 posts
163 upvotes
Toronto, ON
wirebound wrote: My LTD benefits are also mandatory, but disability insurance is only costing me $20/month. My complete health care benefits package costs me more. Are you sure the $800/year is *just* for disability and not part of a bigger benefits package?
$800/year sounds about right. Works out to be roughly 67/month. Premiums are typically based on a percentage of your salary
Banned
User avatar
Jun 8, 2008
3977 posts
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Toronto
Ahh I see. In my case my employer pays 80% of my disability benefits, I guess the $20/month I'm paying is 20%.
Newbie
Feb 9, 2018
3 posts
Read the Employment Standards Code for your juridical unit of the geographical unit you are in. Comprehend the Interpretation of it as it is not ordinary language. That is the minimum you cannot contract out of. I will keep my mouth shut about the other "Deductions" imposed upon you.

The Life insurance is an extra scam or scheme your employer is completely ignorant of and "Imposing" a cost upon you that you do not want. It's all about the money. Not about your well being.

i asked my HR to show me the obligation that I am obligated to give up a portion of my property or rights and income to a third party. Still waiting for any demonstrable justification. Wrote no contract or no consent on the life insurance policy when it clearly stated three options. 1) to agree and to have life insurance. 2) to be partially covered. 3) to opt out. I still have my job and do not pay into life insurance.

If your employer is forcing you to comply with something that is optional and you do not want it then they cannot force it upon you. They will try though, because they are ignorant and think they know everything.

Freedom of association.
Liberty.

Majority of employers are completely ignorant to certain things. Especially the interpretation of Law. They, and majority of people, think it is ordinary wording but it is full of trickery, deceit, and burdens people with a debt obligation.
Deal Addict
User avatar
Mar 9, 2012
4102 posts
2980 upvotes
Kitchener
DevinC146830 wrote:
The Life insurance is an extra scam or scheme your employer is completely ignorant of and "Imposing" a cost upon you that you do not want. It's all about the money. Not about your well being.
Bull.

When our company added LTD to our benefits, it didn't cost an extra penny. We still got our raises like we were supposed to. Same when they added life insurance. There is no business that's going to add costs to itself and not have it benefit the employee.

What it does do is allow employee's to take meaningful time off of work if they're really sick, rather than go to work disabled.

I work with a guy that was all upset upon getting full-time (after 11 years of part-time) of having to pay into the retirement plan. Lots of times this is conditions of employment, are they're very good to have.
Why can't we all just get along?
Newbie
Feb 9, 2018
3 posts
If that makes you feel safe and comfortable then go ahead.

I'm just saying that an employer cannot hold that as a condition of employment. As they are not part of performing the job.

Are the so called "benefits" actual conditions of employment? I do not see such mandatory requirements in Employment Standards Acts.
To compel someone into an extra "Benefit" and to deny employment, if it is not wanted, is inconsistent with E.S.A.

IF your raises cover the extra debt obligation you pay into then good for you in getting raises. Some people are not so lucky and are treated as Subjects rather than assets.
Sr. Member
May 30, 2011
679 posts
242 upvotes
Halifax
FlyingOctopus wrote: They didn't.

If you got badly sick or injured you frequently died unless you had wealthy friends or family to take care of you.
You win comment if this forum! So true

OP That's great you have a nest egg. Anything can happen. I'm 30 with a chronic illness and most likely will never work again. Because my job offered Ltd I don't have to worry about where my income is coming from. To each their own. Guess we value things differently.
Member
Apr 15, 2009
318 posts
325 upvotes
toronto
FlyingOctopus wrote:
Or get cancer. Or a heart attack or stroke. Or some other disease. Or get in some type of accident. There are plenty of conditions that could force you to be away from work for a while. Many Canadians would have large financial problems if they had to be away from work for months or years and didn't have any income.
Or slip on ice and break your leg ( like me currently) where you can't sit at the desk for more than 15 minutes and need to lay down and elevate your leg for 6 or 8 weeks. Can't drive, can't walk. When walking with crutches can't bring your laptop with you as you have no free hands. In 8 weeks, you missed 2 rent payments or 2 mortgages, or depleted your savings by good 5-10k depending on the size of your family. That is 10 years worth of insurance. So.. 3 events during working lifetime will wipe out all the expense. That's not that unlikely, especially that it could be one event of 26 weeks that cost more than lifetime of insurance. Also, as you get older, more and more possible causes come in play.

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