Group LTD vs Individual Non-Cancelable Disability Insurance

Group Long Term Disability vs. Individual Non-Cancelable Disability Insurance

Group LTD vs Individual Disability Insurance

Important areas to consider Group Individual
Benefit amount Based on T4’d salary (excludes bonuses, commissions, shift premiums/overtime, corporate profits), capped at 85% (non-taxable benefit, 80% if taxable) by “All Source Maximum” Includes all sources of income (bonuses, other contract work, commissions, corporate profits), not capped by “All Source Maximum”
Income at claim time Cannot continue in the event of total disability, otherwise there will be a $ for $ reduction in the LTD benefit payable Can continue during total/partial disability without impact to benefits received from insurer
Definition of disability at claim time Disability based on 2 year regular occ, then any occ for the remainder of the benefit period Disability based on regular/own occ for the entire benefit period
Definition of disability options Limited to total disability Includes total, partial and residual disability
Ownership of plan Owned by the company, you’re the “certificate” holder Owned by the individual
Deductibility of premiums Employer can deduct premiums An incorporated business can deduct premiums for individual coverage
Premiums Premiums are not guaranteed.  Annually renewed based on demographics and volume of the group Premiums are guaranteed never to change up to age 65.
Contract Not guaranteed.  Annually renewed Guaranteed never to change, unless requested by owner, up to age 65
Taxability If employer paid, benefits received are taxable, if employee paid benefits are tax-free Benefits received are tax-free
Flexibility Limited.  Employer chooses plan design for entire group. Tailored to individual needs with various options (ie. COLA, partial disability, future savings protector, future earnings protection, return of premium)
Portability No.  Coverage is lost when insured leaves that employer/association Yes, fully portable.  Stays with owner for life of the contract
Waiting Period Consecutive days of total disability (usually 121 days) Accumulated days of total/partial disability
Benefits offset with other sources Offset with CPP, Auto Insurance, WSIB, subrogation, child benefits, other association disability coverage No offsets for 4A and 3A occupational classes.  2A, A, B occupations offset with WSIB and Auto Insurance