When the economy makes headlines — whether for inflation, rising interest rates, or job market uncertainty — most Canadians think about mortgages, groceries, or gas prices. But for people living with a disability, these economic shifts have much deeper consequences.

Economic instability doesn’t just affect your wallet; it can threaten your financial security, health, and peace of mind. If you’re receiving long-term disability (LTD) benefits, or you’re thinking about going off work due to illness or injury, it’s important to understand how broader economic trends can shape your day-to-day reality — and even influence how your insurance company treats you.

At Mulqueen Disability Law, we see this intersection every day. Clients tell us that the stress of living on a fixed LTD income feels heavier now than ever before. Here’s why.

1. When Your LTD Benefits Don’t Keep Up with the Cost of Living

Most long-term disability insurance policies replace 60% to 70% of your pre-disability income. For someone earning $70,000 before becoming disabled, that could mean living on $42,000 to $49,000 per year — before taxes.

What many people don’t realize is that LTD benefits are not indexed to inflation. That means when prices rise — as they have steadily over the past few years — your benefit’s real value decreases. Rent, groceries, and basic necessities have climbed sharply since 2020, yet LTD payments remain static.

For someone already living with a chronic condition, this can make life precarious. Clients tell us they are cutting back on medications, postponing physiotherapy, or cancelling counselling sessions — all because those supports are no longer affordable. This creates a vicious cycle: untreated symptoms slow recovery, which extends disability and increases stress.

If you’re on LTD, it’s vital to budget realistically for ongoing cost increases and to explore whether any other sources of financial assistance — such as the Canada Disability Benefit, provincial disability programs, or tax credits — might be available.

2. The Ripple Effect of Economic Downturns on Insurance Companies

Economic instability doesn’t just affect individuals — it also impacts the insurance companies that pay LTD benefits.

When markets are volatile, insurers earn less on investments. Since those returns fund benefit payments, many companies respond by tightening claim management practices. That can mean:

• More frequent requests for medical updates
  
• Mandatory “independent” medical exams (often with doctors chosen by the insurer)
  
• Earlier pushes for “return-to-work” or “rehabilitation” plans
  
• Heightened skepticism of mental health or pain-related claims
  

These actions can feel intrusive or even adversarial — especially when you’re already under pressure.

Over the past two years, we’ve noticed a clear pattern: economic stress often leads to stricter LTD adjudication. In some cases, valid claims are terminated prematurely under the pretext of “insufficient medical evidence.”

If this happens to you, remember that your insurer has a legal duty of good faith. They must treat you fairly and evaluate your claim honestly. When they don’t, you have the right to challenge their decision.

Our firm routinely helps clients appeal LTD denials and pursue legal action when insurers act unreasonably. These cases can be won — and often, they result in reinstated benefits or fair settlements.

3. The Emotional Toll of Financial Uncertainty

Living on long-term disability is already isolating and stressful. Add financial instability, and the strain compounds quickly.

Clients often describe the experience as “living in limbo.” Each month feels uncertain: Will my insurer continue paying? Can I afford my medications next month? Should I try going back to work even though I’m not ready?

These pressures can intensify anxiety and depression, especially for those whose disabilities already involve mental health challenges. In many cases, financial insecurity directly undermines recovery.

As lawyers, we see our role not just as advocates for fair treatment, but as partners in stability. That means helping you understand your options, protecting your benefits, and ensuring you’re not pressured into decisions that could harm your health or long-term financial security.

4. Returning to Work in an Unstable Economy

For many people on LTD, the ultimate goal is to return to work. But in a shaky economy, that transition can be complicated.

Some employers are cutting positions, restructuring, or expecting employees to take on heavier workloads. Others are reluctant to accommodate modified duties or flexible schedules — even though they’re legally required to.

Meanwhile, insurers may pressure claimants to return to work prematurely, arguing that “some” ability to work means full capacity. We’ve seen clients lose benefits because they attempted a return too early and couldn’t sustain it.

Here’s what we tell our clients:

• Don’t rush back. Your recovery timeline should be guided by your doctor, not your insurer.
  
• Document everything. Keep records of all medical recommendations and employer communications.
  
• Get advice before returning. Once you return, it may be harder to reactivate LTD benefits if you relapse.
  

Returning to work is a positive goal — but it must be done safely and strategically, especially when the economy and job market are unstable.

5. Government Supports and the New Canada Disability Benefit

One encouraging development is the federal government’s introduction of the Canada Disability Benefit (CDB), which launched in 2025. The CDB provides up to $2,400 per year — about $200 a month — to eligible working-age Canadians with disabilities.

While the amount is modest, it signals an important recognition that people with disabilities face systemic financial barriers.

For those on LTD, the CDB may offer a small cushion against rising costs. However, it’s crucial to understand that insurers may try to offset other income sources against your LTD benefit. Before applying, seek legal advice to ensure that accepting the CDB won’t reduce your monthly LTD payment.

6. The Legal Perspective: Planning for Instability

From a legal standpoint, economic uncertainty highlights why knowledge and preparation are so important when it comes to LTD claims.

• Review your policy early. Many people don’t read their policy until after they’ve filed a claim. Understanding your coverage limits, benefit duration, and offset clauses can prevent surprises.
  
• Keep thorough documentation. Maintain copies of medical reports, correspondence with your insurer, and notes from every call or meeting.
  
• Seek professional help early. If you sense your insurer is preparing to challenge or terminate your claim, talk to a lawyer before that happens. Early intervention can often prevent escalation.
  

At our firm, we approach LTD cases holistically. We know the law, but we also understand the human cost — the fatigue, frustration, and fear that come with losing your income while fighting to recover your health.

7. Finding Stability in Uncertain Times

Economic instability is beyond any one person’s control. But how you respond to it — and who you have in your corner — makes all the difference.

If you’re on long-term disability, remember: you are not powerless. You have rights, and you deserve to be treated with dignity and fairness.

Contact us for a Free Consultation

Mulqueen Disability Law specializes in hard-to-prove long-term disability claims for “Invisible Conditions” such as mental illness (depression, anxiety, PTSD) and chronic conditions (pain, neurological, immunological, concussion, post-COVID)  Contact us for a free confidential consultation.

Mulqueen Disability Law is a boutique law firm, focused on litigating long-term disability insurance benefit claims. Courtney Mulqueen and her team of legal professionals are Trauma-Informed Certified and have over two decades of experience exclusively in the area of long-term disability law. She and her team draw on their “insider” experience working for the insurance companies (including, Canada Life, Sun Life, Manulife, and OTIP), that they now sue for their clients.  

The preceding is not intended to be legal advice. This blog is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog, you understand that there is no solicitor client relationship between you and the blog publisher. The blog should not be used as a substitute for competent legal advice from a licensed lawyer in your jurisdiction. If your disability claim has been denied and you require legal advice, please contact a lawyer specializing in disability law.