My reply:
Typically, RBC Insurance, Manulife or Canada Life are the three carriers that offer high quality disability contracts that can supplement your Group Long Term Disability (LTD). All three companies are good companies, however, you need to first find out which company offers you the best occupation class. A broker who understands disability insurance can help you there.
When looking at Group LTD, you need to determine how much coverage you have under your group plan. If you work for a large employer, you may have optional coverage available which you can compare against taking individual coverage. Most plans don’t have that as an option. Also, one can rarely opt out of their Group LTD since it’s mandatory.
- To determine the amount you have, you will need to find the percentage of income covered. For example, 66.67% of your income. If you earn a bonus or commission, you need to confirm that is covered under the definition of earnings or not. Many group plans only cover base salary.
- Next, you will need to see if there is a maximum. For example, 66.67% to a maximum of $3,500. There are two different maximums in many cases. One is called a NEM (non-evidence maximum) and that is the amount you qualify for without any medical underwriting. The second is an overall maximum, which you would need to provide evidence of insurability to qualify for.
- You also need to determine the taxation at time of claim. If employer is paying the premium for disability, the monthly benefit is taxable at time of claim – creating a gap in coverage most likely.
- Once you know how much you have under your group plan, you can determine if that’s enough or not. You will then want to look at the definition of disability and limitations/exclusions to determine if you are comfortable with the contractual wording or not. Some plans are better than others.
Most group policies are not portable, meaning if you left/lost your job, you lose your disability coverage. If you have a small individual policy, you could increase it down the road using the future insurability option without underwriting. This is a main reason why I typically recommend individual coverage over optional Group LTD.
We would be happy to review your Group LTD policy to help you understand exactly how it works and how much it would pay out in the event of a claim. Feel free to book a time with us using our ONLINE CALENDAR for a free, no-obligation consultation.