Are long-term disability benefits taxable in Canada?
It depends on who paid the premiums. If your employer paid the LTD premiums, the benefits you receive are taxable income. If you paid the premiums yourself with after-tax dollars, the benefits are received tax-free. This distinction can change your net benefit by 20–40%.
Does CPP disability reduce my LTD benefit?
Yes, in most cases. Group LTD policies contain an offset clause that deducts CPP disability (CPP-D) benefits dollar-for-dollar from your LTD payment. Your total income stays roughly the same, but the insurer pays less. You are usually required to apply for CPP-D as a condition of your policy.
What is the difference between own-occupation and any-occupation LTD?
Own-occupation coverage pays if you cannot perform the duties of your own job. Any-occupation coverage (which most policies switch to after 24 months) only pays if you cannot perform any job for which you are reasonably suited by education, training, or experience. The any-occupation test is much harder to meet.
How long do LTD benefits last?
Most group LTD policies pay to age 65, provided you continue to meet the disability definition. After the initial own-occupation period (typically 24 months), you must satisfy the stricter any-occupation test to keep receiving benefits.