Tag Archives: disability policy

Watch Out for “Work” Provisions

In a previous post, we discussed the importance of how your policy defines the key term “total disability,” and provides several examples of “total disability” definitions.  The definition of “total disability” in your policy can be good, bad, or somewhere in-between when it comes to collecting your benefits.

Policies with “true own occupation” provisions are ideal.  Here’s an example of a “true own occupation” provision:

Under this type of provision, you are “totally disabled” if you can’t work in your occupation (for example, you can no longer perform dentistry).  This means that you can still work in a different field and receive your benefits under this type of policy.

Insurance companies often try to make other policies look like true own occupation policies, and include phrases like “own occupation” or “your occupation,” but then tack on additional qualifiers to create more restrictive policies.

One common example of a restriction you should watch out for is a “no work” provision.  Although these provisions can contain the phrase “your occupation” they only pay total disability benefits if you are not working in any occupation.  Here’s an example from an actual policy:

As you can see, under this type of provision, you cannot work in another field and still receive benefits.  This can be problematic if you do not have sufficient disability coverage to meet all of your monthly expenses, as you’re not able to work to supplement your income.

A “no work” provision is something that is relatively easy to recognize and catch, if you read your policy carefully.  Recently, we have come across a definition of “total disability” that is not so easy to spot, but can dramatically impact you ability to collect benefits.  Here’s an example, taken from a 2015 MassMutual policy:

At first glance, this looks like a standard “own-occupation” provision—in fact, it is entitled “Own Occupation Rider.”  But if you take the time to read it more closely, you’ll notice that the second bullet point requires you to be working in another occupation in order to receive “total disability” benefits.

Obviously, this is not a policy you want.  If you have a severely disabling condition, it may prevent you from working in any occupation, placing you in the unfortunate position of being unable to collect your benefits, even though you are clearly disabled and unable to work in any capacity.  Additionally, many professionals have limited training or work history outside their profession, so it can be difficult for them to find alternative employment or transition into another field—particularly later in life.

These “work” provisions appear to be a relatively new phenomenon, and are becoming increasingly more common in the newer policies being issued by insurance companies.  It is crucial that you watch out for these “work” provisions and make sure to read both the policies definition of “own-occupation” and “total disability.”  While many plans contain the phrase “own-occupation”, including this example, they often aren’t true own-occupation policies and you shouldn’t rely on an insurance agent to disclose this information.  Oftentimes, your agent may not even realize all of the ramifications of the language and definitions in the policy that they are selling to you.

Lastly, you’ll also note that this particular provision was not included in the standard “definitions” section of the policy, but was instead attached to the policy as a “rider,” making it even harder to spot.  It’s important to remember that many definitions and provisions that limit coverage are contained in riders, which typically appear at the end of your policy.  Remember, you should read any policy from start to finish before purchasing.

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Case Study: Mental Health Disability Claims – Part 2

In Part 1 of this post, we started looking at a case involving a mental disability claim where the court reversed Unum’s claim denial under ERISA de novo review. In Part 2, we are going to look at how the same court determined the extent of claimant’s benefits.

Turning back to the Doe case we examined in Part 1, after the court reversed the denial, the parties could not agree on the amount of benefits claimants was entitled to. In previous posts, we have discussed how many policies have a mental health exclusion that limits recovery to a particular period—usually 2-3 years. Unfortunately for our claimant, he had such a provision in his policy, which provided that his “lifetime cumulative maximum benefit period for all disabilities due to mental illness” was “24 months.”[1]

Not surprisingly, Unum invoked this provision and asserted that it only had to pay benefits for a 24 month period. The court agreed, for several reasons:

  • To begin, the policy defined “mental illness” as “a psychiatric or psychological condition classified in the [DSM], published by the American Psychiatric Association, most current at the start of disability.” All of claimant’s conditions (major depression, OCD, ADHD, OCPD, and Asperger’s) were classified in the DSM-IV.
  • Claimant attempted to assert that his disability was not a “mental illness” because it was “biologically based.” Id. While this type of argument had been accepted by some other courts, the court in Doe determined that it was not convincing in this particular instance because the claimant’s policy expressly defined “mental illness” as a condition classified in the DSM-IV. The court also noted that DSM-IV itself notes that “there is much ‘physical’ in ‘mental’ disorders and much ‘mental’ in ‘physical’ disorders” Id.
  • Accordingly, the court concluded that because the policy was “concerned only with whether a condition is classified in the DSM,” whether claimant’s conditions had “biological bases” was “immaterial.”

Thus, even though the Doe claimant was successful in obtaining a reversal of the claim denial, in the end, he only received 24 months of benefits due to the mental health exclusion.

If you are purchasing a new policy, you will want to avoid such exclusions where possible. If you have a mental disability and are concerned about your chances of recovering benefits, an experienced disability insurance attorney can look over your policy and give you a sense of the likelihood that your claim will be approved, and the extent of the benefits you would be entitled to.

[1] See Doe v. Unum Life Ins. Co. of Am., No. 12 CIV. 9327 LAK, 2015 WL 5826696 (S.D.N.Y. Oct. 5, 2015).

 

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Build Your Own Insurance: What to Look for in a Policy

Recently, insurers have started to allow consumers to build and personalize their own insurance policies online. For instance, Guardian recently announced the launch of its online insurance quoting tool. According to Guardian, the tool “educates clients on the costs for various options based on age and occupation, demonstrates how adding or removing certain options affects pricing, and shows how to create the plan that best matches their individual needs.”[1]

If this “build your own insurance” concept catches on, consumers may have much more control over the terms of their policies than they have had in the past. Accordingly, in this post we are going to talk about things to look for in a policy, and some things to avoid in a policy.

Things to Look for in a Policy

Generally speaking, here are a few things that you will want to look for when selecting a policy:

  • Make sure that the policy provides for lifetime benefits.
  • Try and find a policy with a COLA (cost of living adjustment) provision. This provision will increase your potential benefits by adjusting for inflation as time passes.
  • Make sure that you get the highest benefit amount you can afford. Remember, if you’re unable to practice, your monthly disability payments may be your only source of income.

Things to Avoid in a Policy

Generally speaking, here are a few things that you should avoid when selecting a policy:

  • “No Work” provisions that only provide benefits if you are unable to perform the material and substantial duties of your own occupation and you are not working in any other occupation.
  • Substance abuse exclusions.
  • Provisions requiring you to apply for Social Security benefits.

Remember, purchasing disability insurance is no different than any other significant purchase.  Be sure to take your time and obtain quotes from multiple insurance companies before making a final decision.

For more information regarding what to look for in a policy, see this podcast interview where Ed Comitz discusses the importance of disability insurance with Dentaltown’s Howard Farran.

[1] See http://www.businesswire.com/news/home/20151028005074/en/Guardian-Empowers-Consumers-Build-Disability-Insurance-Coverage.

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