Toronto’s University Avenue, known for years as “Tombstone Row”, is headquarters for the largest number of private insurance companies. And it’s along this broad avenue, that there was some recent rejoicing at the federal government’s 2012 Budget. The private insurance industry was pleased to see the government’s commitment to introducing legislation that requires federally-regulated employers to insure the long-term disability (LTD) plans offered to employees.

If you’re employer goes bankrupt and doesn’t have insured long-term disability plans, you could lose your LTD coverage. This provision in the 2012 Budget is what’s known as the Nortel clause, because that’s exactly what happened to employees there on long-term disability when Nortel went bankrupt.

The Globe & Mail reported recently that, according to Frank Swedlove, President of the Canadian Life and Health Insurance Association, “This is extremely meaningful for Canadian employees who work for companies under federal jurisdiction. Insuring LTD plans is the only way to fully protect those who become disabled if their employer goes bankrupt.”

Even with this ruling, you want to be sure. If you’re on long-term disability through your employer, do you know if your employer has insurance for that plan should the company go under?

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