Long Term Disability Insurance | Canadian Personal Finance Blog

Nortel Keeps on Screwing

I have written previously about the plight of the folks who were in the Nortel Disability plan (and are now in a bad predicament), but they lost one of their most active advocates in Peter Burns over the weekend. Peter attempted to put a face to the folks effected by the Nortel Disability debacle (because Nortel was self-insured, the disability insurance pay outs became simply another group of creditors).

My connection to this story is that I paid into this fund, assuming I was protecting my family, when I worked at Nortel, but I was lucky that I never had to test it?s usefulness. I am also aware of a bunch of folks who are now in a much worse financial place because of the January deadline which cut off these folks from the benefits they thought they were purchasing.

Given there are a lot of folks who do worry about the future and attempt to protect their families with disability insurance, they need to find out how this disability insurance actually works. If it is with your employer and they self-insure, you can easily end up in the same predicament as the former Nortel employees.

The insurance looked like it was being run by SUN Life, but in fact they were simply administrators, and it was Nortel who was paying the bills (which was cheaper for Nortel at the time), but now with Nortel being a bankrupt husk of itself, now things are very different. The disability payments got thrown in with the hundreds of millions owed to vendors, customers and partners, and thus were not going to get paid much at all. As of January the pay outs have stopped and now these folks are living on whatever disability income they can get from the Government.

A good example of doing the right thing and still ending up in a bad place. Research who(m) you are insured with and make sure the insurance is going to be there when you might need it.

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Source: http://www.canajunfinances.com/2011/05/18/long-term-disability-insurance/

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