Tag Archives: own occupation

Disability Insurance: What Residents Need to Know – Part 2

In our previous post, we looked at how important it is for residents to have a plan to protect themselves financially in the unfortunate event they become disabled.  In this post we will address some critical terms to look for when comparing potential policies.

Perhaps the most important provision in your policy is the definition of “Total Disability.”  For physicians, dentists, and other highly specialized professionals who have invested both years and hundreds of thousands of dollars in their careers, a policy that defines “Total Disability” in terms of your inability to perform the specific duties of your “own occupation” (as opposed to “any occupation”) is critical.  If your policy defines “Total Disability” as being unable to work in “any occupation,” it will be much more difficult to establish that you are entitled to benefits, in the event you suffer from a disabling condition.

In addition to knowing and understanding your policy’s definition of “total disability,” it is also crucial to know how working in another profession is treated by your policy.   For instance, if you happened to be an oral surgeon with an essential tremor, you may no longer be able to operate safely on patients, but you may still be able (and want) to teach. Alternatively, if you happened to be a physician who did not take steps to increase your disability coverage to match your increases in earnings, working in another capacity may be the only way to maintain your lifestyle in the event of disability.  Consequently, it is also important to know if your policy will allow you to work in another capacity and still collect benefits.  Along those lines, here are a few other provisions you will want to watch out for.

No Work Provisions

These provisions mandate that 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 financial needs.

Work Provisions

These types of provisions require you to work in another occupation.  This, of course, can make it impossible to collect on your benefits if your disability prevents you from working.

In our next post we will look at how you can select a plan that grows with you over time, as both your financial obligations and income change.

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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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Disability Insurance Profiles: Principal Life

We are expanding our list of insurance company profiles that specifically market to dentists and doctors to include Principal Life.

See our other profiles of Great-West, MassMutual, MetLife, Northwestern Mutual, Guardian, Hartford, and Standard.

Principal Life (also known as “Principal Financial Group”) was founded in 1879.  Initially, Principal Life operated primarily as an insurance company. Principal Life is now a member of the Fortune 500, and offers several additional services, such as retirement and asset management. Principal has most recently realized a growth in net income from $1.112 billion in June of 2014 to $1.290 billion in June of 2015.

Company: Principal Financial Group or The Principal.

Location: Des Moines, Iowa.

Associated Entities: Principal Financial Services, Inc.; Principal Life Insurance Company; Principal Real Estate Investors, LLC; Spectrum Asset Management, Inc.; Post Advisory Group, LLC; Columbus Circle Investors; Edge Management, Inc.; Morley Financial Services Inc.; Finisterre Capital, LLP.

Assets: $530.3 billion.

Notable Policy Features:

Principal Life sells polices that define “disability” as “own occupation”, which means that you are considered totally disabled if you are unable to perform the duties of your occupation. While this may seem like the right policy for a medical professional, you should be aware of a couple caveats.  Coverage under a Principal Life policy is, in part, based upon a key definition that is usually referred to as your “occupation period.”  Essentially, your “occupation period” is the time frame during which the “own occupation” definition of totally disabled applied.  Once the “occupation period” has expired, Principal Life will only pay you benefits if you are unable to work in any occupation that you are reasonably suited to work in, based on your education, training, and experience.

The length of your “occupation period” can range from a base of 2 years after your disability to a period of 5 years, until age 65, until age 67, or until age 70, depending on your “occupation class.”  Oftentimes, the policy provisions regarding “occupation periods” can be convoluted and difficult to decipher.  If you unsure about the length of your “occupation period” under the terms of the policy, an experienced disability insurance attorney can help you understand the applicable policy language.

Claims Management Approach:

In comparison with other insurance companies, Principal Life generally conducts more in-person field interviews with claimants.  Principal Life will not only conduct a field interview when you initially file your claim, but will also likely conduct several additional follow up interviews throughout the claims process.

Most insurance companies require you to fill out generic questionnaires that ask for information about the nature of your disability, among other things.  Because Principal Life handles a lot of disability claims by physicians, it has created a particular “Medical Professional Occupation and Financial Questionnaire” that is more comprehensive than a generic questionnaire, and is specifically tailored towards collecting information from medical professionals.  The questionnaire is quite extensive, and asks about a wide variety of information, from your ownership interest in your practice, to whether your practice participates in a health care network, to the credentials of the medical professional owners and associate professionals you work with, to whether you receive any reimbursements from prescriptions.  If you are unsure about the content or scope of any questionnaire you receive, an experienced disability insurance attorney can help answer any questions you may have.

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Disability Insurer Profiles: Northwestern Mutual

In this series, we’re taking a look at some of the most popular disability insurance companies for doctors.  See our profiles of MassMutual and MetLife.  Northwestern Mutual is another disability insurer that specifically markets its policies to physicians and dentists.

In 2014, the  company insured 476,000 people through 727,000 individual disability policies. Northwestern Mutual prides itself on paying more dividends that its competitors.  In order to do that, of  course, it must maintain consistently high profit levels.

Company: Northwestern Mutual Life Insurance Company.

Location: Milwaukee, Wisconsin.

Associated Entities: Northwestern Long Term Care Insurance Co., Northwestern Mutual Investment Services, LLC, Northwestern Mutual Wealth Management Co., The Frank Russell Co.

Assets: $217.1 billion in 2014.

Notable Policy Features:  Northwestern Mutual sells policies with an “own occupation” definition of total disability.  However, these policies are often only truly “own occupation” for a limited amount of time, after which they become any occupation policies (only providing benefits if you are unable to work in any job) or “no work” own occupation policies (only providing benefits if you are unable to perform your job duties and are not working in another job).

For instance, a Northwestern Mutual policy might include the following definition:

Total Disability. Until the end of the Initial Period [defined elsewhere as 60 months of benefits], the Insured is totally disabled when is unable to perform the principal duties of his occupation.  After the Initial Period [i.e., 60 months], the Insured is totally disabled when he is unable to perform the principal duties of his occupation and is not gainfully employed in any occupation.

In order to make sure a Northwestern Mutual disability insurance policy keeps the own occupation definition for as long as you hold the policy, you may need to purchase an additional benefit rider.

Read more about Northwestern Mutual’s interpretation of its own occupation policies.

Claims Management Approach: Some of the claims strategies that Northwestern Mutual is known to use include conducting in-home field interviews on top of third-party surveillance, hiring its own medical consultants to review claimants’ records and opine on whether or not they are disabled, and demanding that claimants (especially those with mental conditions) undergo “independent” medical examinations (IMEs) with providers of Northwestern Mutual’s choosing.

 

These profiles are based on our opinions and experience. Additional source(s): Northwestern Mutual’s 2013 Annual Report; Northwestern Mutual Fact Sheet 2014; Forbes.com.

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Why Won’t My Doctor Help With My Disability Insurance Claim?

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We frequently discuss how important it is for your treating doctor to support your disability insurance claim.  Oftentimes, though, doctors are reluctant to help with the process.  Understanding why your provider is hesitant to get involved can better equip you to enlist his or her support.

In our experience, these are the most common reasons why treatment providers decline to assist with disability insurance claims:

They don’t have time.  Doctors have extremely busy schedules.  Often, they’re concerned that they simply don’t have enough time to properly complete all of the insurance company’s required forms or to answer questions from your claims adjuster.

They are worried about the insurance company harassing them.  Many healthcare providers know how complex and combative disability insurance claims can be.  Sometimes, providers don’t want to get involved with a claim at all, because they’ve heard of (or experienced) claims personnel harassing treating doctors.  This can be a legitimate concern, as left unchecked, insurance companies will often bother treating doctors with repetitive requests for information, pushy phone calls, or by second-guessing the doctors’ treatment plan.

They are worried about doing something to hurt your claim.  On the other hand, many providers aren’t familiar with the private disability insurance claims process at all.  This sometimes makes providers hesitant to complete Attending Physician’s Statements or to discuss your claim with an adjuster for fear that they will inadvertently say something that prejudices you.

They don’t know the definition of disability in your policy.  Not every treatment provider is familiar with the type of own-occupation policy that many physicians, dentists, and other professionals purchase.  When some providers hear the word “disability,” they think of a state of total helplessness, or of the much more stringent Social Security definition of “disability.”  If a provider doesn’t know that your policy deems you “disabled” if your condition prevents you from performing the duties of your own job, he or she might think you don’t qualify for benefits.

Continue reading Why Won’t My Doctor Help With My Disability Insurance Claim?

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Understanding Residual Disability Benefits: Are They Worth The Cost? Part 3 – Current Monthly Income

In our previous posts, we identified the basic formula disability insurers use to calculate residual (partial) disability benefits and discussed variations in how disability insurers calculate Prior Monthly Income.  Now, we will examine the other principal component in calculating a residual disability benefit: Current Monthly Income.

Current Monthly Income is the calculation of how much a doctor is earning now, versus how much he was earning prior to his disability.  Although this sounds like a simple concept, calculating Current Monthly Income can be challenging in the healthcare industry.  Many physicians and dentists own their own practices or are a partner in a practice group.  Their income is not only based on their productivity, but also includes a passive component from the other business activities of the practice.  For example, a dentist may employ one or more hygienists or associate dentists who generate additional revenue.  When a doctor becomes disabled, the practice revenue may remain relatively constant as associates increase their production to account for the doctor’s reduced schedule.

Some insurers take advantage of this by calculating Current Monthly Income not on the doctor’s production, but rather on the practice’s revenue.  This fails to take into account the true financial impact of a disability because, while revenue may remain high, expenses increase as associate doctors and hygienists work more (and earn more) to fill in for the disabled doctor.

Additionally, many doctors pay themselves based on a percentage of their own production, in addition to the income they earn as practice owners.  When a doctor becomes partially disabled, his income from working in the practice will drop, even if the practice’s overall profitability does not.  Depending on the language in a particular policy, the policy may not take into account the drop in production, and the doctor may not be able to recover the full loss caused by his disability.

Continue reading Understanding Residual Disability Benefits: Are They Worth The Cost? Part 3 – Current Monthly Income

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Can My Disability Insurance Company Contact My Employer?

We previously posted about the breadth of authorization forms that disability insurers request you sign at the beginning of your claim.  These forms allow your insurance company not only to obtain medical records and other relevant information, but also to contact your employer to discuss your specific job duties, among other things.

This can be unsettling as you may not want your employer to know about your medical condition, or you may fear what your employer might say that could jeopardize your claim. Unfortunately, there is little that you can do to stop the interview from occurring, but you can prepare yourself and your employer beforehand.

Most policies require that, in order to be considered “Totally Disabled,” you must be unable to perform the material and substantial duties of your occupation, and be under the regular care of a physician.  Accordingly, your insurance company needs to ascertain your important occupational duties.

If you can still perform some of your important occupational duties, though not all of them, you will not be considered “Totally Disabled” under most policies.  It is important, therefore, to anticipate that your insurer will contact your employer so that you can ensure that only accurate and relevant information is communicated.

There is a critical difference between important occupational duties, and those that are merely incidental.  Duties that encompass only a small percentage of your time are incidental or peripheral duties and not part of your regular profession.  It is therefore improper for your insurance company to consider these duties when determining your eligibility for benefits.

For example, a licensed dentist who works 90% of the time treating patients and 10% of the time on administrative duties is regularly engaged in chair dentistry for purposes of an own- occupation disability insurance claim.  Administrative work such as overseeing office staff, paying bills or attending continuing education classes are merely incidental to his material and substantial duties as a full-time dentist.

By focusing on insignificant duties, and getting your employer to sign off on those duties as important parts of your regular occupation, your insurance company will have made it much more difficult for you to collect your rightful benefits.  While this is an unscrupulous practice, it often occurs and produces an unfair result. Considering each and every incidental duty and allowing a finding that you are Totally Disabled only if you are unable to perform each and every one of those duties is a nitpicking approach that would equate Total Disability with utter helplessness.  Obviously, that is not the type of coverage that you purchased, nor what had been marketed to you at the point of sale.

To ensure that your employer does not provide misinformation to your insurance company during the interview, here are some tips:

Prepare an Occupational Description:  Prepare an occupational description listing your important duties and have your employer sign off on it.  Then provide the occupational description to your insurance company at the beginning of your claim.  By reviewing this document with your employer, it will be less likely that your insurance company will be able to focus on the irrelevant, incidental duties of your job.

Explain How Your Policy Works to Your Employer:  Let your employer know that you have an occupation-specific policy that entitles you to benefits if you cannot perform the important duties of your job.  Further explain that your occupational description is intended to outline your important duties, and other duties you may perform are merely incidental.  This way, you are focusing your employer on what’s relevant and preparing him or her for the interview.

Being prepared and vigilant at the beginning of your claim increases the likelihood that you will be paid the benefits that you deserve.

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Disability Insurance Q&A: What is the Difference between “Own Occupation” and “Any Occupation” in Disability Insurance?

Question:  What is the difference between “own occupation” and “any occupation” in disability insurance?

Answer:  Most doctors purchase an “own-occupation” policy, which provides compensation following a disability that prevents the insured from performing his or her particular duties.  If an insured doctor or dentist does not have an “own-occupation” policy, he or she must be disabled from performing the duties of any occupation for which he or she is reasonably qualified in order to receive disability benefits.

Some disability insurance policies are a hybrid, providing own-occupation benefits for a limited period of time, and then converting coverage to the “any occupation” standard.

Some of our previous blog posts analyzing some of the potential loopholes that disability insurers will try to apply to an own-occupation policy can be read here, here and here.

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Case Study: What Does “Material and Substantial” Mean?

In 2007, the Georgia Court of Appeals had to address this question in Pomerance v. Berkshire Life Insurance Company of America. 654 S.E.2d. 638 (2007). Alan Pomerance was an obstetrician/gynecologist with four disability insurance policies from Berkshire. These policies provided own-occupation coverage, meaning that “total disability” was defined as “your inability to perform the material and substantial duties of your occupation.”

Dr. Pomerance’s occupational duties included delivering babies, surgeries, C-sections, office visits, making hospital rounds, and being on call.  After being diagnosed with a degenerative knee condition, Dr. Pomerance filed a total disability claim with Berkshire, explaining that he could no longer stand for long period of time, so he couldn’t perform deliveries and hospital surgeries, be on call, or assist in the emergency room.  Because of his disability, Dr. Pomerance was forced to restrict his practice solely to wellness office visits, which included patient exams, counseling, nonsurgical care, and minor biopsies, but none of his other former duties.

Berkshire declined to pay Dr. Pomerance total disability benefits, arguing that he was only partially disabled because he could still perform one of his “substantial” duties, i.e., office visits.  Dr. Pomerance contacted Berkshire and objected to its determination, but Berkshire still refused him total disability benefits.  Dr. Pomerance filed suit against Berkshire, claiming breach of contract and bad faith refusal to pay the amounts owed.  Continue reading Case Study: What Does “Material and Substantial” Mean?

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Unum UK CEO Takes Over Individual Disability Policy Block

Unum announced last week that Jack McGarry, former CEO of Unum’s United Kingdom arm, has been brought back to the U.S. to manage Unum’s closed block of business.  This “closed block of business” includes its individual disability policies issued prior to the mid-1990s–the type of policies that Unum no longer sells.  According to Unum Group CEO Thomas Watjen, quoted in this article, Unum hopes that McGarry’s experience will benefit the company:

“Our closed block of business represents over 25 percent of our capital, and I’m confident that Jack’s significant financial and operational expertise will help us improve the performance of this business.”

Unum doesn’t explain what it means by “improving the performance of this business.”  The policies McGarry will be managing aren’t sold anymore, so he can’t improve that block’s performance by changing the way policies are sold, who they are sold to, or how they are priced.  And at this point, Unum has to honor the outstanding policies as they are written, so he can’t lawfully help the block improve performance by skimping on benefit payments.

Watjen’s statement could mean that McGarry, who has discussed Unum’s confusing policy language in the past, will help the individual disability department better serve customers by making Unum’s communications easier to understand.  However, it is also likely that “improving the performance” of that block of business means that McGarry will focus the company’s efforts on continuing to scrutinize claims made on the individual policies to avoid paying benefits (and thus save Unum money).  Either way, our disability insurance attorneys will be closely monitoring Unum and any new developments under McGarry’s leadership.

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