Long-term disability policies provide financial support for policyholders who have suffered an injury or medical condition that affects their ability to work. They are administered by insurance companies, who assess whether policyholders are eligible for long-term disability benefits under the terms of the particular policy.
This article provides an introduction to long-term disability benefits and looks at the circumstances in which policyholders may seek to challenge a denial of long-term disability benefits by the insurance company.
An individual’s entitlement to long-term disability benefits depends on the unique circumstances of the case, the specific policy and its terms, and the complex evidence involved (medical or otherwise).
Long-term disability policies, which are sometimes provided as a benefit by employers to their employees, can provide benefits after a prolonged period of being unable to work, if the policyholder is suffering from a “total disability”. Courts have said:
The test of total disability is satisfied when the circumstances are such that a reasonable man would recognize that he should not engage in certain activity even though he literally is not physically unable to do so. In other words, total disability does not mean absolute physical inability to transact any kind of business pertaining to one’s occupation, but rather that there is a total disability if the insured’s injuries are such that common care and prudence require him to desist from his business or occupation in order to effectuate a cure…
Normally, policies provide long-term disability benefits for a specified time period if the policyholder is unable to perform the duties of their own occupation. After this period, in order to continue being eligible for benefits, policyholders need to be unable to work in other occupations (depending on the policy, often those for which the policyholder is suited by education, training and experience, and for which they would earn a specified percentage of their pre-disability earnings).
The types of injuries or illnesses that qualify as a long-term disability depend on each policy’s specific terms but may include musculoskeletal injuries, heart or lung disease, neurological or cognitive issues, cancer, or degenerative conditions (for example, multiple sclerosis or macular degeneration).
If eligible under the terms of the relevant long-term disability policy, the policyholder will receive a percentage of their monthly income. There is often also a cap on the amount payable each month.
Provided that the policyholder remains totally disabled as defined under the policy, benefits will often be payable until the policyholder reaches a specific age, such as 65. Many policies require the policyholder to participate in return-to-work planning or rehabilitation programs to remain eligible to receive long-term disability benefits.
Decisions about eligibility are made by the insurance company, not the employer. The insurer assesses claims and decides whether the policyholder has a total disability based on the information provided in the application, including medical information provided by the policyholder’s doctor. The claim forms need to be completed by the deadline specified in the policy, otherwise, the claim might be deemed to have been abandoned.
Depending on the status of the disability, claims may be periodically reviewed to check for ongoing eligibility to receive long-term disability benefits. The insurance company might request further medical information.
Policyholders may face a denial of long-term disability benefits in several situations. The insurance company may have concerns about the legitimacy or severity of the disability based on expert medical evidence or their own investigation of the insured. They may determine that the insured’s circumstances do not qualify for coverage under the policy or that the insured failed to bring their claim within the applicable legislated or contractual timelines.
If the insurance company denies your claim for long-term disability benefits, it is important to speak with an experienced insurance lawyer as soon as possible.
It is normally possible to appeal the decision and ask the insurance company to reconsider its decision. This is not an independent process. It is the insurance company making another decision on the claim for long-term disability benefits.
If you meet all the requirements of the insurance policy, the insurer is required to pay long-term disability benefits. If it refuses to do so, you may have a claim against the insurance company for compensation. For example, if the company refuses to pay benefits because it considers that the policyholder does not have a total disability, the policyholder can ask the court to determine, with the assistance of expert medical evidence, whether the insurance company is in breach of contract. Often, insurers and policyholders will agree to settle the claim before the matter proceeds to trial.
It is very important to understand that there are time limits to all long-term disability benefits claims. The policy will contain a deadline to submit an application for benefits to the insurance company. There is also a statutory limitation period for bringing a legal claim against the insurance company. If you do not take action within the time frame, you may be prevented from bringing a claim for compensation.
There are also several other types of long-term disability programs available in British Columbia, so it is important to determine if you may be covered under these. They include WorkSafe BC (workers’ compensation) and the Canada Pension Plan – Disability.
The lawyers of Meridian Law Group are known for their exceptional insurance litigation practice. Since 1988, the firm and its predecessors have been a cornerstone of British Columbia’s insurance bar and continue to represent some of the largest insurance companies in Canada today. The firm provides robust advice and creative legal solutions for insurers and policyholders in any legal forum, including negotiations, mediation, arbitration, or litigation.
Meridian Law Group is prominently located across from the courthouse in downtown Vancouver and represents clients throughout West Vancouver, North Vancouver, Coquitlam, Penticton, Kelowna, Richmond, New Westminster, Burnaby, Surrey, Langley, and White Rock. To arrange a confidential consultation for your insurance dispute, please call 604-687-2277 or reach out online.