Understanding the Difference Between Short-term and Long-term Disability Insurance

A Guide to Understanding the Disability Insurance that is Right for You

If you have had an accident and want to make a disability insurance claim you may have turned to the Internet for useful information to help you decide what type of claim you can make.

You may have tried to find out what is classed as a disability. You might have also have tried to establish what is considered a short-term disability and a long-term disability.

There appears to be no agreed definition on any of the above. In reality, the majority of insurance companies have their own definitions of what they class a disability, whether on a short- or long-term basis.

The purpose of this article is to assist you by providing clear information to guide you in the right direction. Whether you want to make a successful insurance claim, or if you are trying to decide what is the best personal insurance policy for you.

Lawyers shaking hand

 Definition of disability

According to the World Health Organization, “Disabilities is an umbrella term, covering impairments, activity
limitations, and participation restrictions. An impairment is a problem in body function or structure; an activity limitation is a difficulty encountered by an individual in executing a task or action; while a participation restriction is a problem experienced by an individual in involvement in life situations.”

From the above, it is perhaps easier to understand why only a broad definition can be given.

The situation in Canada is not helped by the fact that some jurisdictions have extremely specific statutory definitions of disability. Saskatchewan and Nova Scotia chose not to provide any formal definition at all. Additionally, certain jurisdictions use qualifiers such as “severe” (Alberta, Québec), “significantly” (British Columbia), or “substantial” (Ontario).

However, it is accepted that ‘working’ definitions of disability exist. Most individual insurance companies have their own definitions of disability. This definition can even vary between insurance plans within the same company!

Woman getting medical attention

What is short-term disability?

The next step is to establish what the difference is between a short-term disability and a long-term disability. Here, the disability itself is not so much the focus of attention. The focus is on the period of time that is classed as ‘short term’.

In Ontario, short-term disability is a period of disability for up to 15 weeks. This is based on the length of time the government provides EI support. For insurance companies, short-term disability extends for a period of six months. Short-term disability insurance and long-term disability insurance policies do not overlap.

If you are covered by insurance policies and you were to break your arm and were unable to work for three months, you would make a claim on your short-term insurance policy. If you were to lose an arm and were unable to work for a year, then you would make claims on both short-term disability insurance and long-term disability insurance policies.

Without any policies, you would make a claim to the state for EI for short-term disability. You would then make a claim to CPP for long-term disability.

Man on crutches

What is long-term disability?

Following on from above, a long-term disability is one which extends beyond a period of six months.

In the unfortunate event you are involved in a serious accident that leaves you permanently disabled, for the first six months after the accident you would make a claim on a short-term disability insurance policy. Even though in reality, the actual disability is long term.

With an accident, or sudden deterioration in your health that will stop you from working again, then you would make a claim on both your short-term and long-term insurance policies. A short-term disability claim would provide financial assistance for up to six months. A long-term disability claim would then take over payments after six months.

If you have been involved in a life-changing accident, or have developed a critical illness, then it might be worth considering hiring a lawyer to make any insurance claim. The main reason for this is that you may not be well enough to make the claim yourself. Additionally, your spouse or partner will likely be busy with your care. They may also be dealing with making any lifestyle changes that may be required.

An experienced lawyer will be able to handle all claims you need to make, leaving you to concentrate on your health.

Person in wheelchair

What is the difference in coverage between short-term disability insurance and long-term disability insurance?

Whether short- or long-term disability insurance, the level of cover you can receive is the same. The coverage is between 60% and 85% of your normal income, subject to an upper limit.

While it is unusual for an insurance company to offer rehabilitation for a short-term disability claim, it is more common for a long-term disability claim. If you make a claim for long-term disability but there is a strong possibility you will be able to return to work after treatment, then a rehabilitation plan may be implemented.

Insurance policies will also reduce payments to you if you are in receipt of any other benefits, such as EI or CPP.

The most important difference with the length of long-term disability insurance policy payments is that while the policy may pay out for a fixed period of time after an accident or illness, after that period the policy will only continue to pay out in full if you remain unable to do any type of work.

Form for insurance coverage

Who provides short- and long-term disability insurance cover for work?

It is important when taking any new job that you establish with your employer if they provide any form of disability insurance. Employers are not legally obliged to provide insurance, and nor do they have to provide sick pay.

However, some employers will provide insurance, often as a ‘benefit’ to attract employees. Employers are more likely to offer long-term disability insurance cover under a group scheme as opposed to short-term disability insurance in Ontario.

Depending on what insurance cover your employer provides, it is important you obtain a copy of the policy. If necessary, you may want to marry in your own complementary policy. This ensures you have insurance coverage for those periods of time your employer’s company policy does not cover.

Man in wheelchair at table

Do you really need disability insurance?

Unless you have substantial personal savings, the answer to this question has to be a resounding ‘yes’. However, you are not legally obliged to have disability insurance. In reality, few of us could continue to have any similar standard of living if we became incapacitated and were unable to earn money.

While the government may provide EI benefits for up to 15 weeks, that isn’t going to support you for long. It is possible to make a claim to the CCP, but that can often take up to a year to come through, if you are successful. You also have to consider how you will manage in the period between then and when EI stops.

If you are self-employed, then your disability insurance policy can make the difference between a business folding or continuing to trade while you are unwell. Many short- and long-term disability insurance policies in Ontario for the self-employed will also cover running costs in your absence.

Man with sprained ankle

Ensuring you get all the benefits you are entitled to if you fall ill or have an accident

Depending on the nature of your illness or the accident you have been involved in, plus the number and nature of disability insurance policies you have, ensuring you get the right and full amount of benefit(s) you are entitled to can be a bit of a minefield.

In certain circumstances, it can reap benefits if you seek the advice of a lawyer experienced in insurance policy claims. Particularly as insurance companies are not known for being overly generous.

In addition, if you have a claim denied for short-term disability when you have a long-term illness, that does not automatically mean you will not be able to claim on your long-term disability insurance policy.

Disability insurance claim form

Applying for Disability Insurance? Conte Jaswal Can Help

You may be taking the right steps in applying, but not getting the policy you deserve.

An experienced insurance policy claim lawyer can help get you the benefits you are legally entitled to.

At Conte Jaswal, we are empathetic to your situation. We’ll fight for you and be your advocate when you go up against the big insurance companies. You do not have to do this alone.

Book a free, no-obligation consultation with us to discuss your options. Accidents happen, but we can help you get the compensation you need to recover.

Contact Conte Jaswal now to start getting your life back on track

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