A Manitoba government employee is suing the province and insurance provider Canada Life after her long-term disability claim was denied by the company, CBC News reported (1). The woman was the manager of the Legislative Assembly gift shop and an employee of the province for over a decade. She was diagnosed with long COVID and chronic fatigue syndrome, which the lawsuit states “wholly prevented” her from performing her normal duties.
The employee submitted a claim to Canada Life in November of 2024 for long-term disability benefits, contending she was unable to work given her condition. The employee was entitled to long-term disability benefits from the provincial government under a group disability plan CBC noted, but Canada Life denied her claim.
After reviewing medical information on file, the insurer concluded that the employee would still be able fulfill her duties “within a sedentary level” and wouldn’t prevent her from carrying out her role. The employee underwent an independent medical examination from a professional specializing in physical medicine and rehabilitation. She recommended for a brain MRI and an assessment from a neurologist — neither have been conducted.
That said, the specialist did note the plaintiff could complete sedentary work “in some capacity.” However, the lawsuit alleges that the defendants knew the plaintiff’s role involved physical work to some degree.
This lawsuit brings to light a big question for Canadians: How exactly do long-term disability claims work?
Don’t Miss
- Want to retire with an extra $1.3M? See how Dave Ramsey’s viral 7-step plan helps millions kill debt and build wealth — and how you can too
- The Canadian economy shrank in Q2 2025 — protect your wallet with these 6 essential money moves (most of which you can complete in just minutes)
- Boomers are out of luck: Robert Kiyosaki warns that the ‘biggest crash in history is coming’ — here’s his strategy to get rich before things get worse
How do long-term disability claims work?
Anyone that has long-term disability coverage — whether through personal coverage or a group plan with an employer — is eligible for long-term disability (LTD) benefits if they meet specific criteria that their policy lays out. While each policy is different per person or employer, there are some general rules all Canadians can take note of. If a claim is successful, the worker could receive up to 90% of their take-home pay.
LTD benefits are administered to give policy holders replacement income if they cannot return to work after their short-term disability benefits run out — or if a worker does not have short-term benefits. For a claim to be approved, the claimant needs to meet specific definitions of having a disability under their policy definitions. For example, Canada Life has three standard definitions that are typically used when determining coverage eligibility (2).
Regular occupation: You’ll receive disability coverage if you’re unable to perform the essential duties of the job you held or are associated with your occupation at the time the disability started. Environmental and workplace factors aren’t considered. This is the alleged claim in the lawsuit from the MB government employee. Canada Life believes that her duties are more sedentary in nature and thus her condition does not stop her from performing her essential tasks.
Gainful employment: You’ll receive disability coverage if your illness or injury prevents you from performing the duties of any occupation for which you’re reasonably suited for.
Disability claims are made through the insurance company that is offering your employer group benefits or your personal benefits through your own policy, Canada Life notes on its website (3). However, Canadians can also potentially receive benefits coverage through the Canadian Pension Plan (CPP) or Workers’ Compensation and employment insurance plans as well.
Read more: What is the best credit card in Canada? It might be the RBC® British Airways Visa Infinite, with a $1,176 first-year value. Compare it with over 140 more in 5 seconds
What to do if your claim is denied
Canada Life may deny a policyholder’s claim for multiple reasons, such as insufficient evidence or if they believe you’re able to work, law firm Samfiru Tumarkin LLP notes (4). However, workers can appeal the decision through Canada Life’s internal appeal process.
To do so, the claimant needs to request their claim file, correct any errors that may be present and submit additional evidence to show why the denial is incorrect. Without evidence countering the core denial rationale, an appeal could fall flat.
According to Canada Life’s process (5), there are three levels of internal appeals, each with their own types of information and pertinent steps to follow.
If the internal appeal process doesn’t yield any headway, injured workers can file a lawsuit against Canada Life within two years of their claim being denied.
Tips for budgeting while living of disability benefits
Receiving a portion of your standard income can add a lot of financial stress to your plate when you’re already dealing with an injury or sustained illness. Here are some tips to help you budget during this difficult time.
- Create an emergency fund in case benefits change. While it might seem difficult to build up a nest egg, settling aside small amounts of money each pay period can help you create a financial buttress in case your benefits change.
- Track your income & expenses. Creating a detailed list of your monthly expenses and expected income payouts can help you manage your finances and see if your disability benefits are covering enough. Not sure how to create a detailed budget? Try using a simple budgeting app.
- Understand all the benefits you are receiving. Being on long-term disability benefits means that you may be eligible for multiple payments from CPP, employment insurance or other sources. Know exactly what you could be eligible for given your situation, as you could find some extra benefits to help you in a pinch.
This government employee’s lawsuit is a stark reminder that while disability benefits under an insurance plan are important to have, they aren’t guaranteed by any means. Make sure you’re prudent with your finances at all times — you never know when your life could change.
What To Read Next
- Here are 5 expenses that Canadians (almost) always overpay for — and very quickly regret. How many are hurting you?
- Ray Dalio just raised a red flag for Americans who ‘care’ about their money — here’s why Canadians should limit their exposure to U.S. investments
- I’m almost 50 and don’t have enough retirement savings. What should I do? Don’t panic. Here are 6 solid ways you can catch up
- Here are the top 7 habits of ‘quietly wealthy’ Canadians. How many do you follow?
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
CBC (1); Canada Life (2, 3, 5); Samfiru Tumarkin LLP (4)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.