What happens to my LTD benefits if the insurance company goes under?

With the recent virus scare, there have been talks about businesses and industries going under.

This thought came to my head, what will happen to our LTD benefits if the insurance company went under? Does that mean our LTD payments are finished as well?

It’s a bit extreme but would like to find out.

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I am guessing our Government will have to bail them out. Too big to fail.

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It will depend on the company and how it operates to be able to tell if it is going down. At this point it is hard to tell the extend of the losses the economy will endure during the global lockdown. Nobody even knows how long it will last.

They are not going to bail out all of them just the most important ones for the economy.

Ok I think we need to ask Dave the lawyer this first to be sure, but based on what I’ve read online most of the insurance companies basically have insurance for their insurance essentially; just like similar to the CIDC that covers your back accounts if the banks fail (to $100,000 of money per certain accounts), there is something called Assuris that does the same thing for insurance companies. This is not backed by the government like CIDC but it is required that all insurers have this type of coverage (you can look at the link below to see if your insurance company has it; looks like most of them are on there); it says it covers up to 85% of your disability income or $2000, whichever is higher. It also notes below that most insurance companies are apparently required to maintain a certain surplus and capital ratio of 120% or more on hand, some have 400% of it. Also note, most insurance companies are pretty huge and their worth is in the multibillions; and to date there have only been like 4 Canadian ones that have gone bankrupt even in hard economic times in the past, ever. So I don’t think we have that much to worry about to be honest in that regard.


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Thank you for the information! This is a good resource. Basically they are saying that in case your insurance company goes bankrupt your claim will be transferred to another insurance company. It is reassuring.

Yes, you are protected if your LTD benefits are with a insurance company in Canada. Where you can have problems is if your LTD benefits are paid via a self-funded LTD plan. These self funded plans are often provided by employers or non-profit organizations. If those plans go bankrupt, people get screwed. This actually happened when Nortel when bankrupt in 2011 or 2013. There were hundreds of people who lost their LTD when that happened. So there is only reason for concern if you are in a self funded plan that is not with a federal or provincial government.

The government brought in new legislation to outlaw these self-funded LTD plans, but it never got passed.

David Brannen

Disability Lawyer with Resolute Legal

The response posted above is based on the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with a lawyer, fully explain your situation, and allow the lawyer enough time to research the applicable law and facts required to give an adequate opinion. The basic information provided above is intended as a public service only, a full one-on-one discussion with a lawyer should be done before taking any any action. The information posted on this forum is available to the viewing public and is not intended to create a lawyer client relationship with any person. If you want one-on-one advice, please click here to request a free consultation or call toll free 1-877-282-5188 to speak with a member with our disability claim support team.


Which party was in power when the legislation was brought in?
Why didn’t it pass?

I am not sure offhand what party was in power or why exactly it didn’t pass into law.

How do you know if the LTD plan is self-funded by an employer (if it was through them you have it)? I worked in administration in healthcare many many years ago before I fell ill and the plan is part of the Ontario Hospital Association (HOOPP); I imagine it’s pretty hard for an entire hospital system to go bankrupt in the province, no? I’m hoping this is not the case, but seems unlikely. How safe are the chances of this not happening for those of us insured by this type of plan?