Long-term Disability Insurance Needs Updating as Canada’s Demographics Change

Ottawa, Ontario–(Newsfile Corp. – October 16, 2024) – Canada’s aging workforce needs different options for long-term disability benefits, which usually end at age 65. Actuarial analysis shows that, although age should still be used to determine insurance eligibility and length of coverage, age 65 as a cut-off may not be appropriate for every workplace.

As more and more Canadians are employed beyond age 65, they lose important income protection in the event of injury or illness. For employees already receiving long-term disability benefits, these often end at age 65.

There are many recent examples of employees and unions challenging the age-based limit of long-term disability benefits through human rights grievances, claiming unlawful discrimination.

In the Canadian Institute of Actuaries’ latest release, Joe Nunes, FCIA, and Mathias Link, LLB, explore how age-based limits in long-term disability insurance affect workplace equity and fairness and examine the broader implications on legislation and insurance plan design.

Their analysis addresses:

• Changing workforce needs: As demographics shift and employers retain older workers, income protection through long-term disability insurance becomes increasingly necessary.
• Current legislative landscape: Age-based limits in employer-sponsored long-term disability insurance need to align with human rights and employment standards.
• Alternative plan designs: The report offers three examples of how long-term disability benefits could be adjusted to support employees over age 65 while maintaining benefit sustainability for all employees.

“Discrimination based on age has no place in our society, especially within the Canadian workplace,” says Nunes. “However, we must also recognize the unique age-based considerations that come with providing insurance coverage. Employers and employees need to understand the risk of disability and the cost trade-offs in the design and pricing of income protection and reach a program design that best meets the needs of the entire group of workers. There is no one-size-fits-all solution.”

The Evolution of Employer-Sponsored Long-Term Disability Plans is available now.

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The Canadian Institute of Actuaries (CIA) is the qualifying and governing body of the actuarial profession in Canada. We develop and uphold rigorous standards, share our risk management expertise, and advance actuarial science to improve lives in Canada and around the world. Our more than 6,000 members apply their knowledge of math, statistics, data analytics, and business in providing services and advice of the highest quality to help Canadian people and organizations face the future with confidence.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/226711