Long Term Disability (“LTD”) insurance policies in Canada generally have a requirement that the employee must be “totally disabled” in order to receive LTD benefits. But what does “totally disabled” mean?
The Definition Of “Totally Disabled”
“Totally disabled” is a legal term, with a special meaning, that is generally a prerequisite for LTD insurance, which means that someone is “unable to perform his normal job”. Contrary to the way it sounds, “totally disabled” does not mean someone must be utterly incapacitated and unable to care for himself.
Nevertheless, the exact definition of the term “totally disabled” will vary somewhat depending on the wording in an individual’s own LTD policy. Each LTD policy will have a clause that states what exactly is, “totally disabled”.
Still, at all times, if there is any dispute, all LTD policy definitions of “totally disabled” are given a rational and liberal interpretation by the courts, regardless of the precise wording in the insurance policy.
Generally, the definition of “totally disabled” in each and every LTD policy, in layman’s terms, is essentially this:
Is the individual able to perform substantially all his/her essential and material job duties? If not, then, he is said to be “totally disabled”.
Where do we get this above-noted definition of “totally disabled”? In Paul Revere Life Insurance Co. v. Sucharov, the Supreme Court of Canada expressly agreed that:
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 own 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: hence, if the condition of the insured is such that in order to effect a cure or prolongation of life, common care and prudence will require that he cease work, he is totally disabled within the meaning of health or accident insurance policies.3
Key Point: LTD insurance policies may have slightly different definitions of “totally disabled” mirroring the above-noted text, but any litigation concerning “total disability” usually centres on the facts in an individual case regarding the degree of physical and/or mental impairment, not the wording of the policy itself.
What Is “Totally Disabled”?
Even if someone can do some of their job, they can still be considered “totally disabled” if common sense requires that the employee stop working if his condition requires it.
Some examples of totally disabled include but are not limited to:
- Brain injuries
- Chronic illnesses
- Chronic pain
- Neurological diseases
- Orthopaedic injuries
- Psychological diseases like depression
The most important thing to know is that “total disability” does not mean absolute de facto disability in the sense that the individual has to be absolutely and unequivocally helpless and unable to do any work task. Total disability in the legal sense does not require that the insured be incapable of all work activity, only that the medical condition is such that ordinary and reasonable prudence would dictate that that person is not fit enough to carry out the main duties of a job of occupation (see Norwood on Life Insurance in Canada, third edition by David Norwood & John P. Weir, Carswell, 2002 at page 471).
What Else Is There To Know?
Different LTD policies may require that an individual will be unable to do either their “own occupation” or “any occupation” in order to be considered “totally disabled”.
Difference Between “Own Occupation” or “Any Occupation”?
An “any occupation” LTD policy means you are totally disabled and entitled to benefits if you cannot work in any occupation you are suited to by education, training, or experience.
An “own occupation” LTD policy means you are totally disabled and entitled to benefits if you cannot work in your usual occupation or your chosen field of employment.
Therefore, an “own Occupation” policy is friendlier to the employee than a “any occupation” LTD policy because unlike an “any occupation” policy, if you could return to work in another field, you could still receive your benefits.
What Happens If You Believe You Are Totally Disabled?
If you have an LTD policy, you might consider contacting a lawyer who focuses on LTD and employment law, such that they can advise you on:
- Advising if you have a “total disability” as per your policy and the legal tests;
- Helping you decide if you should apply for LTD or seek a disability accommodation;
- Helping you prepare your LTD application through your insurer;
- Organizing medical documents and forms that support your LTD application;
- Advising on next steps and follow up procedures that will occur over the next two years if you are approved for LTD at the outset;
- Appealing the decision if you are not approved for LTD or if you are cut off from LTD after being approved.
Most lawyers who deal with LTD will provide a free consultation, and they will offer various cost structures to proceed thereafter such that there would be a price range in that it will be cheaper for a simple LTD application and approval, but more expensive if the application has to be litigated through the courts if it is first denied.
Jeff is a lawyer in Toronto who works for a technology startup. Jeff is a frequent lecturer on employment law and is the author of an employment law textbook and various trade journal articles. Jeff is interested in Canadian business, technology and law, and this blog is his platform to share his views and tips in those areas.