In Ontario the content of a policy of insurance for a car is heavily regulated by the government. There is very little difference between automobile policies offered by insurance companies – although some of these differences can be significant – like the amount of coverage over the minimum required by law.
Disability insurance is definitely different. It’s almost like the wild west – anything goes as there is minimal regulation as compared to auto insurance. In fact I have read some disability policies and wondered whether the insurer ever had to pay out on certain benefits as it is so difficult to qualify. And at these times I have wondered why these companies are even allowed to sell such insurance.
Most disability policies I have seen distinguish between short term disability (STD) and long term disability (LTD) – if long term disability benefits are available.
Often benefits are payable to the disabled person for short term disability if the person is unable to perform the essential duties of their own occupation. Often after a specified period of time, two years is the period of time that I see most often, short term benefits switch to long term benefits.
But here is where it gets tricky. Most disability policies of insurance will provide that long term benefits are payable after two years only if the disabled person is unable to do not only their own job but any job for which that person is reasonably suited. This can become a challenging legal issue and I have seen insurer lawyers try to get smart. For example, if my client is a skilled trades person earning a decent salary of say $60,000 to $70,000 per year I have seen insurance lawyers argue that the insurer is not required to pay the benefit because my client is able to be a parking lot attendant – which requires much less physical effort but also usually pays minimum wage. In such a case the law would likely find that the parking lot job is not a suitable alternative because the pay is too low as compared to my client’s previous salary.
However, if the policy says that my client is only entitled to LTD benefits if he cannot do any job – regardless of the suitability then yes the insurer would be justified in denying benefits.
Disability insurance is like most things in life – you usually get what you pay for. If you have group benefits there isn’t anything you can do about the language of coverage. But if you are buying the policy yourself you have choices – choose well as your future may depend on it.