The Value of LTD & CI for Employers: A Case Study

by PAUL BEAUVAIS

I’d like to share a case study today about a long-standing client of ours in the technology sector.  During our 9-month check-in, followed by the renewal a few months later, we identified some crucial gaps in their coverage. Specifically, three employees had been on disability leave in the last year for various time periods and only had access to EI (sickness benefits), with no Long Term Disability (LTD) or Critical Illness (CI) coverage.

During the renewal, we discussed our comprehensive checklist, highlighting the importance of LTD and CI coverages. Initially, the client expressed concerns about the cost, stating, "It's quite expensive." I replied: “It can also be a big difference maker if someone has a critical illness and/or go off on medical leave for a substantial period of time. After, EI (sickness), they might have to use personal savings, RRSP’s, remortgage their home or other options that are far from ideal.”

We explained that most plans have the employee pay the premium, allowing them to benefit from the non-taxable status if they become disabled. However, some employers prefer to pay the premium themselves. In such cases, the Provincial and Federal withholding is no different from regular pay. Reflecting on my early career experience paying out LTD claims, I shared that not one claimant ever anticipated being disabled for over a year.

After considering this, the client opted for the non-taxable plan. We conducted an in-person information session to address employees' questions, ensuring they understood the value of having adequate coverage. Although they initially decided against CI coverage, we revisited the topic a year later.

Understanding the value of attracting and retaining employees, especially in a tight labor market, the client implemented a modest CI plan. They opted to pay for it, meaning employees would incur a small amount of tax on their pay but gain valuable coverage. CI plans provide crucial protection as they offer tax-free payments upon diagnosis of any covered condition, without the need for disability.

The updated benefits plan has provided our client, their employees, and their families with peace of mind. This enhanced plan ensures comprehensive coverage, contributing to a secure and supportive work environment.  I feel the updated benefits plan helps our client and their employees, sleep better at night, knowing that in the event of an unexpected illness or injury, they will be financially supported.

PAUL BEAUVAIS, GBA, CMA

REGIONAL VICE PRESIDENT

KINGSTON / EASTERN ONTARIO

Peak Benefit Solutions

Paul brings over 30 years of experience in the group benefits and group retirement industry with him to his role at Peak Benefit Solutions. He specializes in providing superior knowledge on group benefit and retirement plans that meet the unique needs of entrepreneurs and small business owners. Drawing upon his extensive experience in the industry and his strong customer service background, Paul’s expertise is frequently relied upon by business leaders across the Durham region and Central Ontario.

Paul lives in Durham with his wife and daughter where he is an active community member with several organizations including the Courtice food bank and the Lions Club.

Peak Benefit Solutions Inc. was established in 2008 and have helped more than 400 clients from entrepreneurs, manufacturing, professional services and public organizations with their comprehensive benefits planning. Every step of the way, we are with you.