Protecting Your Retirement Income – Part 3

Retirement Protection Insurance?

In our last two posts we discussed two different disability insurance policy riders that may help mitigate the problems that a disabling condition can create for your retirement planning. A graded lifetime benefits rider and a lump sum benefit rider offer two alternative solutions to the same problem, with one providing a reliable, steady income stream and the other providing a greater degree of financial flexibility. If neither of those options are particularly appealing, some disability insurance companies have created another product that, unlike lifetime benefits or a lump sum, is specifically tailored toward the retirement planning challenges posed by a total and permanent disability.

What Is Retirement Protection Insurance?

Retirement protection insurance was created by some insurers precisely to deal with these concerns. Depending on the insurer, this product may be offered as a standalone policy or as a rider to your existing disability insurance policy. The idea behind retirement protection insurance is to create an investment product that functions similarly to the qualified 401(k) you contribute to in your current occupation, allowing you to take advantage of both the market returns and employer contributions that you currently enjoy.

How does this work? If you become totally disabled and your claim is approved, your insurer will establish a trust for your benefit. Each month, benefits are deposited into the trust and invested in index funds and other investment portfolios similar to the options you have with your employer-sponsored 401(k). This product can cover up to 100% of your retirement contributions and 100% of employer contributions at a maximum of $50,000 per year. Under the terms of the trust, you will be able to access these funds after age 65.

Potential Problems

At first glance, this product appears to solve the problems that a disability can create for retirement savings. Specifically, it appears tailor made as a substitute for your employer-sponsored 401(k), which you can no longer contribute to once you stop working due to a disability. However, there are some issues with this particular product that you will want to clarify with your insurer before purchasing it as a rider or as a standalone policy.

First, some insurers are using a different definition of disability for this product than for your standard individual disability insurance policy. In many cases, the definition of total disability for this specific product is narrower and more stringent (i.e. you must be unable to perform work in any occupation) than the specialty-specific own-occupation definition in most disability insurance policies purchased by doctors and dentists.

For example, assume you have an own occupation policy with this rider and due to your medical condition you are unable to perform your duties as an orthopedic surgeon. For three years you collect monthly benefits through your policy and also enjoy three years’ worth of contributions to the trust account established for your benefit by your insurer. After three years, you go back to work as a primary care physician. Because you are still disabled under the terms of your own occupation policy, you continue receiving monthly benefits. However, the retirement contributions to your trust cease because the definition of total disability is “any occupation.” Under this scenario, even though you are totally disabled for the purposes of your policy, you are no longer receiving the benefit of the rider you paid good money for because it measures your disability by a different standard.

Second, because the investment account is held in trust, somebody has to manage it. As a result, there may be fees associated with both the management of the trust and the investment account. Also, 401(k) accounts receive special tax treatment – as long as the money stays in your account it is allowed to grow tax-free without any capital gains tax levied against your investment returns. It may very well be that any investment account held in trust by your insurer through this insurance product will be fully taxed.

Before you purchase retirement protection insurance either as a rider or as a standalone policy, you will want to clarify the issues addressed above. Make sure you fully understand the terms (including the definition of total disability), the fees, and the tax implications of this product before you purchase it. Though initially it may look like an attractive option, the costs may outweigh the benefits, and other options to protect your retirement income may be a better solution for your particular circumstances and objectives.

Protecting Your Retirement Income – Part 2

Lump Sum Rider

In our last post we discussed some of the ways a disability can impact your retirement planning and how a graded lifetime benefits rider can help mitigate some of those problems. A lifetime benefits rider certainly has its advantages, but it is not the only solution to the retirement income problems created by a disabling condition. A lump sum rider offers an alternative solution to the same problem.

A lump sum rider offers a different approach to the retirement income issue. Unlike the lifetime benefits rider, which simply pays a set monthly amount for the remainder of your lifetime after you reach your policy expiration age (generally 65 or 67), the lump sum rider provides a one-time payment once you reach policy expiration age. With this rider, in order to be eligible for the lump sum payment, you must receive benefits equal to twelve times the monthly benefit amount during your policy term. Generally speaking, this just means you have to receive benefits for at least one year.

The amount of your lump sum payment is typically a percentage of the aggregate sum of benefits you received during your policy term, in many cases between thirty percent and forty percent of total benefits received. For example, assume you have a policy that pays $10,000 per month in benefits and you become disabled at age 50. By the time you reach age 65, your policy will have paid you a total of $1,800,000 in benefits. With this rider, when your regular monthly benefits terminated, you would receive an additional one-time lump sum payment of $630,000.

This rider has its advantages and disadvantages over a graded lifetime benefits rider. Receiving a lump sum, especially one as large as the example above, can provide you with a degree of immediate financial flexibility that is not available with a set monthly amount like what you would receive with a lifetime benefits rider. For example, you can take your lump sum and turn it over to an investment manager, who will in turn be able to put your money to work for you and create passive income. Or, alternatively, a lump sum can provide you with capital necessary to pay off your mortgage, auto loans, and any existing debt, and use the remainder to supplement any retirement savings you amassed prior to your disability. A lump sum payment also provides a measure of security that lifetime benefits do not: with lifetime benefits the insurance company still controls your monthly payments, and there is no guarantee that your benefits will never be terminated.

The disadvantage to a lump sum rider is self-evident: it is a one-time payment. Unlike the lifetime benefits rider, which provides the security and certainty of a steady monthly income, once the lump sum is gone, it’s gone. The degree to which this is a negative characteristic of the lump sum rider largely depends on the type of person it applies to. For individuals more likely to save, invest, and exercise financial restraint, the lump sum rider may offer a greater degree of financial freedom and flexibility. For those more likely to splurge and spend the money they have, a lump sum rider may not have the structure and stability to ensure a reliable stream of income throughout their retirement years. For those individuals, a lifetime benefits rider may be a better solution.

However, if neither the lifetime benefits rider nor the lump sum benefit rider seem to suit your retirement needs, there is a third option. In our next post, we will discuss retirement protection insurance – a product that is specifically tailored to the problems that a disability can create for retirement planning.

Disabilities Insurance and Student Loans: How Can I Protect Myself?

Picture this scenario: you’ve just graduated dental school.  You have well over $100,000 in student loan debt.  You recently started working in a dental practice.  But then, unexpectedly, you become disabled and are unable to work.  All of a sudden you have no income and no way to make your student loan payments.  What would you do?

This scenario may seem far fetched, but one in four people will become disabled at some point before retirement.  Medical and dental students routinely graduate with hundreds of thousands of dollars in debt, and student loan debt in the United States has surpassed $1.3 trillion.  If you are carrying a heavy student debt burden, a disabling condition can have a magnifying effect on your financial security.  An inability to pay your student loans puts you at risk for default and a slew of financially-damaging penalties.

You might also be surprised to learn that student loan debt cannot be discharged in bankruptcy.  In fact, the only individuals who are eligible to have their federal student loans discharged are those who meet the federal government’s stringent standard of “total and permanent disability.” Keep in mind that this discharge provision only applies to federal loans.  Private lenders may or may not have similar provisions in their loan agreements.

In the event of a disabling condition – even if you have a disability insurance policy – your monthly benefits may not be enough to cover both their living expenses and your student loan payments.  One potential solution is purchasing a disability insurance policy with a student loan protection rider.  Disability insurers have started to offer student loan protection riders that typically allow individuals to secure monthly benefits in addition to their standard policy benefits for the purpose of covering their student loan payments.  Usually, no loan documentation is required until a claim is filed.  Additionally, students can receive discounted rates, including no cost while in school, on group disability insurance policies through either the American Dental Association or local dental associations.  Whichever policy you choose, your insurance company must still determine that you are totally disabled before you are eligible to collect the benefits associated with this rider.

An alternative solution is to simply purchase additional coverage to ensure that both your monthly living expenses and student loan payments are accounted for in the event of a disability.  One advantage to this approach is that you have greater flexibility to allocate your monthly benefits where you see fit.  Before you purchase a student loan protection rider or additional coverage on your individual disability insurance policy, check with your insurance provider to see how much both options cost in comparison to the additional benefits you receive.  Depending on your carrier, one option may be more financially beneficial than the other.

Disability Insurance for the Professional Athlete: Can It Protect Your Value?

After an unprecedented overtime win by the New England Patriots, Super Bowl LI is in the books. Now that the 2016-2017 NFL season is officially over, all eyes are turning to the upcoming 2017 NFL Draft in late April. The most elite players in college football will be vying for the 253 open slots on 32 NFL teams. Of the 253 picks, only the select few at the top of the first round will receive contracts in the millions of dollars. Most of the players in these coveted top spots already know who they are – in the months leading up to the draft, they’ve been communicating with potential teams through their agents and meeting with their potential new coaches. These athletes, who spend most days pushing their bodies to the limit in one of the most dangerous professional sports in the United States, quickly realize how much they have to lose if they get hurt before the draft. A serious injury before the draft can mean millions of dollars in lost income. In recent years, disability insurance underwriters have started to market disability a insurance product to NFL, NBA, and MLB prospects who stand to lose everything if they suffer a catastrophic injury.

Permanent Total Disability

The traditional disability insurance policy for a professional athlete isn’t that different from an own occupation policy that a doctor or dentist might obtain at the beginning of their career. Many high profile college athletes seek out these policies to protect their financial future in the event of a career-ending injury. Some athletes, like former University of Kentucky basketball power forward Nerlens Noel, who was ultimately drafted number six overall in the NBA draft, pay large sums of money for high-value policies through private underwriters. However, many top prospects are also able to obtain policies through the NCAA’s Exceptional Student-Athlete Disability Insurance (ESDI) – a program specifically reserved for athletes predicted to be high draft picks. Former Stanford University quarterback Andrew Luck, for example, obtained a $5 million policy through ESDI before being drafted by the Indianapolis Colts.

However, the difficulty with these policies is that under the definition of permanent total disability, the policyholder must be unable to ever return to their sport in a professional capacity – an injury that merely reduces the policyholder’s earning potential does not make the policyholder eligible to collect benefits. So, the policyholder is still able to earn money in his or her sport’s minor league, they are likely ineligible for benefits. As medical technology, surgical techniques, and rehabilitation therapies improve, the total permanent disability standard becomes even more difficult to reach. College superstars like Willis McGahee, Marcus Lattimore, and Kevin Ware have suffered horrific on-field and on-court injuries and gone on to play professionally. NFL superstars like Rob Gronkowski and Adrian Peterson have sustained multiple injuries that would have ended their careers a decade ago.  Because of the advances in sports medicine, total disability claims by professional athletes are rare. Consequently, the focus of the professional sports disability insurance industry has turned to a new product: loss-of-value insurance.


Loss-of-value insurance is typically a rider on a total permanent disability policy, and is specifically marketed to top college prospects who are expected to be selected in the top tier of their respective drafts, largely football and basketball. For an eligible athlete, the underwriter establishes a baseline projected rookie contract. If the athlete is undrafted or receives a contract significantly less valuable than their projected baseline due to injury or illness, the policy will pay out a benefit.

Take, for example, University of Michigan tight end Jake Butt, who tore his ACL during the first quarter of this year’s Orange Bowl. The injury prevented Butt from participating in the NFL draft process due to surgery and recovery, and the potential first round pick will likely fall in the draft rankings as a result. Prior to this season, Butt obtained a $4 million total disability insurance policy with a $2 million loss-of-value rider for which he is eligible for benefits if drafted after the second round. This year’s NFL draft may test insurers’ willingness to pay up on one of these high-value claims if Butt is not drafted in the first two rounds.

Can You Collect on Your Loss-of-Value Policy?

Loss-of-value insurance is a relatively new phenomenon. So far, only a select few loss-of-value policies have ever actually paid out. In previous posts, we have talked about the incentives that disability insurance companies have to delay and deny benefits for high-earning individuals with legitimate disabilities. In the same way that dentists are often targeted for denial in their disability insurance claims, professional athletes with loss-of-value disability insurance are targeted because of the enormous financial incentive to deny benefits. So, not surprisingly, Lloyd’s of London, the most prominent underwriter in the loss-of-value insurance market, has been sued by several NFL prospects whose claims were denied. A lot of money is at stake in these policies, and to the insurance companies it may be worthwhile to spend years litigating a claim that could cost the insurance company millions of dollars. The importance of an experienced advocate in such a scenario cannot be understated.

To this day, only two professional football players have successfully collected on loss-of-value disability insurance: Silas Redd and Ifo Ekpre-Olomu. Redd, a highly sought-after running back from the University of Southern California, went undrafted in the 2014 NFL Draft after suffering a season-ending knee injury. Ekpre-Olomu, a cornerback for the University of Oregon, collected $3 million from his loss-of-value rider after the projected first-round pick fell to the seventh round in the 2015 NFL Draft due to an ACL tear suffered at the end of his senior season.

If Jake Butt’s draft position drops below the second round, it will provide another interesting test case for how disability insurers handle these high-value claims. Given the large amount of money at stake, it is certainly possible that insurers will keep denying claims until they are forced, through litigation, to settle or pay out.

Ninth Circuit Determines That Persons Who Can’t Sit for More than Four Hours Can’t Perform Sedentary Work

In a previous post, we summarized the five exertion levels (sedentary work, light work, medium work, heavy work, and very heavy work), as defined by the Dictionary of Occupational Titles (DOT), and discussed why they matter in the context of disability claims.  Essentially, these exertion levels function as broad classifications that are used to categorize particular jobs and occupations.  The physical requirements under each exertion level increase as you move up from level to level, with sedentary work requiring the least physical exertion and very heavy work requiring the most physical exertion.

If you have an “own occupation” policy, these exertion levels will likely not come into play, because the terms of your policy will require your insurer to consider the particular duties of your specific occupation, as opposed to the broader requirements of the various exertion levels.  However, if you have an “any occupation” policy, which requires you to establish that your disability prevents you from working in any capacity, your insurer will likely seek to determine your restrictions and limitations at the outset of your claim, using claim forms or possibly a functional capacity evaluation (FCE).  Once they have done so, they will then likely seek to fit you into one of the five exertion levels listed above and have their in-house vocational consultant provide them with a list of jobs that you can perform given your limitations.

Not surprisingly, your insurer will generally try to fit you into the highest category possible, and then argue that you can perform all of the jobs at that exertion level, and all jobs classified at a lower exertion level.  Typically, someone suffering from a disabling condition can easily establish that they cannot perform medium, heavy, or very heavy work, so, in most cases, the insurer will be trying to establish that you can perform light work, or sedentary work, at the very least.

As you might expect, one of the key differences between sedentary and light work is that sedentary work mostly involves sitting, without much need for physical exertion, whereas light work involves a significant amount of walking and standing, in addition to other physical requirements, such as the ability to push or pull objects and the ability to operate controls.  Given the low physical demands of sedentary work, it can often be difficult to establish that you cannot perform sedentary work.  This can be problematic, because there are many jobs that qualify as sedentary work.  However, if you have a disability that prevents you from sitting for extended periods of time, the very thing that makes sedentary work less physically demanding—i.e. the fact that you can sit during the job—actually ends up being the very reason why you cannot perform sedentary work.

While this is a common sense argument, many insurance companies refuse to accept it and nevertheless determine that claimants who cannot sit for extended periods of time can perform sedentary work.  However, the Ninth Circuit Court of Appeals recently held in Armani v. Northwestern Mutual Life Insurance Company that insurers must consider how long a claimant can sit at a time when assessing whether they can perform sedentary work.

Avery Armani was a full-time controller for the Renaissance Insurance Agency who injured his back on the job in January 2011.  He eventually stopped working as a result of the pain from a disc herniation, muscle spasms, and sciatica.  Multiple doctors confirmed that Avery was unable to perform the duties of his job, which required him to sit for approximately seven hours per day. In July 2011, Northwestern Mutual classified Avery’s occupation as “sedentary” and approved his claim under the “own occupation” provision of his employer-sponsored plan.

Despite regular statements to Northwestern Mutual from his doctor that he could only sit between two and four hours a day and must alternate between standing and sitting every thirty minutes, Avery’s disability benefits were terminated in July 2013.  Northwestern Mutual’s claims handler identified three similar positions in addition to Avery’s own position that he could perform at a “sedentary” level, and determined that his condition no longer qualified as a disability under his policy.

When his benefits were terminated, Avery sued Northwestern Mutual.  After several years, his case ultimately reached the Ninth Circuit Court of Appeals.  In resolving the case, the Ninth Circuit held that an individual who cannot sit more than four hours in an eight-hour workday cannot perform “sedentary” work that requires “sitting most of the time.”  In reaching its conclusion, the Ninth Circuit cited seven other federal courts that follow similar rules, including the Second Circuit Court of Appeals, the Sixth Circuit Court of Appeals, the District of Oregon, the Central District of California, the Northern District of New York, the Southern District of New York, and the District of Vermont.

While this case is not binding in every jurisdiction, it does serve to reinforce the common sense argument that a claimant who cannot sit for extended periods of time due to his or her disability cannot perform sedentary work.  Additionally, though this rule was created in the context of a disability insurance policy governed by ERISA, the court did not qualify its definition or expressly limit its holding to cases involving employer-sponsored policies.  Accordingly, in light of this recent ruling, it would be reasonable to argue that a court assessing an “own occupation” provision of an individual policy should similarly consider whether sitting for extended periods of time is a material and substantial duty of the insured’s occupation.  If it is, and the insured has a condition that prevents him or her from sitting for more than four hours of a time—such as deep vein thrombosis (DVT) or chronic pain due to degenerative disc disease—then the insured arguably cannot perform his or her prior occupation and is entitled to disability benefits.

In short, the Armani case is noteworthy because its reasoning could potentially be applied to not only ERISA cases, but also disability cases involving individual policies and occupations—such as oral surgeon, endodontist, periodontist, attorney, accountant, etc.—that require the insured to sit for long periods of time in order to perform the occupation’s material duties.  It will be interesting to see if, in the future, courts expand the Armani holding to cases involving individual policies outside of the ERISA context.


Source: Armani v. Northwestern Mutual Life Insurance Company, No. 14-56866, 2016 WL 6543523 (2016)


The Devil Is In the Details: Long Term Disability Policies and Benefit Offsets

In a previous post, we discussed a feature of long-term disability insurance policies that is easily overlooked and frequently leaves policyholders feeling cheated and deceived by their insurer:  the benefit offset provision.  When a person signs up for a disability insurance policy, he or she expects to pay a certain premium in exchange for the assurance that the insurance company will provide the agreed-upon monthly benefit listed in the policy, should they ever become disabled.  What many people do not realize is that some disability insurance policies contain language that permits the insurer to reduce the amount of monthly benefits it is required to pay if the policyholder receives other benefits from another source.

Worker’s compensation, supplementary disability insurance policies, state disability benefits, and social security are some of the most common “other sources” from which policyholders may unexpectedly find their disability insurance benefits subject to an offset.  The frequency of offset provisions varies by policy type.  They are more likely to appear in group policies and employer-sponsored ERISA policies, and are rarely found in individual disability insurance policies.

Benefit offset provisions can have significant and often unforeseen financial repercussions, as illustrated by the recent account of a couple from Fremont, Nebraska.  As reported by WOWT Channel 6 News, Mike Rydel and his wife Carla were receiving monthly benefits under Mr. Rydel’s disability insurance policy with Cigna.  Mr. Rydel had suffered a stroke in the fall of 2015 that had left him incapacitated and unable to work.  The Rydels’ financial situation was made even more dire by Mr. Rydel’s need for 24-hour care, which prevented Mrs. Rydel from working as well.

In an effort to supplement his family’s income, Mr. Rydel applied for Social Security disability benefits.  When his claim was approved, the Rydels expected a much needed boost to their monthly income.  Unfortunately, due to an offset provision in Mr. Rydel’s policy, his monthly benefits under the Cigna policy were reduced as a result of the approved Social Security claim, and his family did not realize any increase in income.

The Rydels were understandably shocked when they were informed by Cigna that Mr. Rydel’s monthly disability insurance benefits would be reduced by the amount he was now receiving from Social Security, and that Cigna would be pocketing the difference.  Perversely, the only party that benefited from Mr. Rydel’s SSDI benefits was Cigna, which was off the hook for a portion of Mr. Rydel’s monthly benefits.  In response to an inquiry from WOWT, Cigna simply asserted that “coordination” of private insurance benefits and government benefits was a long-standing practice – an assurance that likely provided no solace to the Rydels.

The Rydels’ story highlights the importance of carefully reviewing every aspect of your disability insurance policy before signing.  Benefit offsets, policy riders, occupational definitions, and appropriate care standards in your policy can significantly impact your ability to collect full benefits if you become disabled.  You should review your policy carefully to determine if it contains any offset provisions that may affect your benefits.  If it does, you will need to take them into account when estimating your monthly benefits.


Unum Study Shows an Increase in Musculoskeletal Disability Claims Over the Past Decade

As we have discussed in previous posts, musculoskeletal disorders are very common among dentists due to the repetitive movements and awkward static positions required to perform dental procedures. Unum, one of the largest private disability insurers in the United States, recently released statistics showing an increase in the filing of musculoskeletal disability claims over the past 10 years.

According to Unum’s internal statistics, long term disability claims related to musculoskeletal issues have risen approximately 33% over the past ten years, and long term disability claims related to joint disorders have risen approximately 22%.  In that same period of time, short term disability claims for musculoskeletal issues have increased by 14%, and short term disability claims for joint disorders have risen 26%.

This trend may lead to Unum directing a greater degree of attention towards musculoskeletal claims as the volume of these claims continues to increase.  Musculoskeletal claims are often targeted by insurance companies for denial or termination because they are easy to undercut—primarily due to the limitations of medical testing in this area.  For instance, it can be difficult to definitively link a patient’s particular subjective symptoms to specific results on an MRI, and other tests, such as EMGs, are not always reliable indicators of the symptoms that a patient is actually experiencing.  Insurers also typically conduct surveillance on individuals with neck and back problems in an effort to collect footage they can use to deny or terminate the claim.  While such footage is usually taken out of context, it can be very difficult to convince the insurance company (or a jury) to reverse a claim denial once the insurer has obtained photos or videos of activities that appear inconsistent with the insured’s disability.

As we have noted in a previous post, Unum no longer sells individual disability insurance policies, so its disability insurance related income is now limited to the premiums being collected on existing policies.  Because benefit denials and termination are the primary ways insurers like Unum can continue to profit from a closed block of business, and musculoskeletal claims are on the rise, Unum may begin subjecting this type of claim to even higher scrutiny.



Long Term Disability by Diagnosis

In previous posts, we have been looking at the findings from the most recent study on long term disability claims conducted by the Council for Disability Awareness.  In this post we will be looking at the types of diagnoses associated with long term disability claims, and which types of claims are most common.

CDA Graph - Diagnosis

As you can see from the chart above, the most common type of both new and existing long term disability is musculoskeletal disorders—a category which includes neck and back pain caused by degenerative disc disease and similar spine and joint disorders.

This is particularly noteworthy because physicians and dentists, who often have to maintain uncomfortable static postures for several hours each day, are very susceptible to musculoskeletal disorders.  In addition, claims involving musculoskeletal disorders can be challenging, because oftentimes there is little objective evidence to verify the pain.  If you suffer from degenerative disc disease or a similar disorder, an experienced disability attorney can explain how to properly document your claim to the insurance company.


MetLife to Exit Individual Disability Insurance Market

MetLife, Inc. the fourth largest provider of long-term disability insurance by market share[1], is suspending sales of its individual disability insurance policies.  In an internal memorandum to producers, MetLife Client Solutions Senior Vice President Kieran Mullins announced that the company would be suspending the individual disability insurance block of business effective September 1, 2016.  In the memo, Mr. Mullins cites the goal of creating a new U.S. Retail organization for its insurance products and the “difficult, but strategic” decisions that led to the shutdown of their individual disability insurance product:

This was not an easy decision to make, given the growth and strength of our IDI business. However, we believe it is the best course of action for the immediate future. While there is tremendous opportunity in this market, the suspension provides us with the time and resources needed to properly separate the U.S. Retail business from MetLife. There is a significant amount of work to be done to retool existing systems – and implement new systems – that will ultimately provide the most value to our customers and sales partners in the years to come.

Insurance news websites are already speculating that the shutdown could put pressure on the remaining thirty-one companies selling individual disability insurance to raise premiums.  Because MetLife controls such a substantial share of the individual disability insurance market, their departure effectively reduces the size of the pool in which the risk can be spread.  Cyril Tuohy, writing for, points to the move as an opportunity for the remaining companies in the market to innovate and attract the business MetLife will be leaving behind.  The company’s departure will favor the insurers whose individual disability policies cater to physicians, dentists, and other high-income professionals, such as Guardian, Principal, The Standard, Ameritas and Northwestern Mutual.[2]

In an accompanying FAQ, MetLife assured producers that existing policies would not be affected by the change, and that they would continue to support policy increases by the terms of the Guaranteed Insurability Option, Automatic Increase Benefit, and Life Event riders.  The memo also noted that MetLife would continue sales of its group, voluntary, and worksite disability products.

It is important to remember that even though MetLife must continue to service its existing policies, shutting down sales of new policies can still affect current policyholders.  Absent the need to sell new policies, an insurer may have less incentive to provide customer service or avoid a complaint from the state insurance board.  Additionally, once a block of business closes, the easiest way to maintain profitability of that product is through claims management.  In real terms that is typically accomplished through claims denial and benefits termination.  We discussed these very tactics in a 2012 blog post about Unum’s management of its closed block of individual disability insurance products.

If you have a MetLife individual disability insurance policy, pay close attention as the business focus shifts away from selling new policies and toward the management of existing policies.  If you have a question or concern regarding your MetLife policy, contact our office.


[2]“Will MetLife’s Suspension Send DI Prices Soaring?” Cyril Tuohy,

Study Shows Increase in Long Term Disability Claim Denials

The most recent study conducted by the Council for Disability Awareness shows that long term disability claim approvals have declined in recent years:

CDA Graph - Claim Approvals

In addition, 50% of the companies surveyed reported increased claim termination rates.

The companies surveyed included:

  • Aetna
  • AIG Benefit Solutions
  • American Fidelity
  • Ameritas
  • Assurant Employee Benefits
  • Disability RMS
  • Guardian
  • The Hartford
  • Illinois Mutual
  • Lincoln Financial Group
  • MassMutual Financial Group
  • MetLife
  • Ohio National
  • Principal Financial
  • Prudential
  • The Standard
  • Sun Life Financial
  • UnitedHealthcare
  • Unum


Long Term Disability by Gender, Age and Occupation

In previous posts, we have reviewed data collected by the Council for Disability Awareness related to long term disability claims.[1]  In the next few posts, we are going to look at the most recent study conducted by the Council for Disability Awareness.

To begin, here are a few of the notable trends that the study revealed regarding the gender, age and occupation of long term disability claimants:

  • The average age of long term disability claimants has increased in recent years, with the vast majority of claimants filing between the ages of 50 and 59.

CDA Graph - Age - 1

CDA Graph - Age - 2

  • The number of in-force individual disability policies for business management and administration, physicians and dental professional occupation categories increased, while the number of in-force policies for sales and marketing professionals decreased.


[1] The Council for Disability Awareness is “a nonprofit organization dedicated to educating the American public about the risk and consequences of experiencing an income-interrupting illness or injury.”


Know Your Limits: How Issue and Participation Limits Affect Your Coverage

Recently, several insurers have decided to raise their Issue and Participation (I&P) limits. In this post we will discuss some of the potential ramifications of increased I&P limits.

What are Issue and Participation Limits?

The Issue Limit is the maximum amount of liability a single insurer will cover for a particular individual. The Participation Limit is the maximum amount of total coverage an insurer is willing to provide after factoring in the coverage that the individual is already receiving from other insurance companies. Usually your maximum monthly benefit is determined by your income, but some insurers allow professionals, such as physicians and dentists, to apply for default rates based on other factors such as occupation, years of experience, etc.  Usually, an insurer’s I&P limits permit coverage in an amount that is approximately 40-65% of your actual monthly income.

Essentially, insurers use I&P limits to make it possible to collectively provide higher total benefits to high income earners, while at the same time ensuring that they are not over-insuring an individual.

What are the Ramifications of Higher Issue and Participation Limits?

In previous posts, we have talked about how in the 1980’s and early 1990’s, disability insurers aggressively marketed policies to doctors, dentists, and other high income earners. We’ve also discussed how, due to the emergence of managed care, doctors and dentists saw a significant decrease in income. The end result was that disabled doctors and dentists had policies that promised benefits that were equal to, or greater than, their modified salaries. When the insurance companies had to start paying the benefits they had promised, they lost hundreds of millions of dollars. This in turn led to insurance companies taking an aggressive stance toward claims involving high paying policies. Most insurers also stopped offering policies with high benefit limits.

Now, it appears that at least some insurance companies have come full circle and are once again marketing policies with high benefit limits. What does this mean? Now that insurers are beginning to raise I&P limits, it may be possible for you to obtain benefit amounts that are closer to your actual monthly income. Remember, as with any insurance, generally speaking, a higher benefit also means higher premiums. However, if you can afford it, it is usually better to have as much coverage as possible.

If insurers end up providing higher benefits again, it will be interesting to see if there is another corresponding spike in claim denials. If you do end up purchasing a high benefit policy, be sure to look it over carefully and make sure that there is not anything in it that would allow the insurance company to limit or deny your claim later on down the road. If you are unsure about whether you are being offered a good policy, an experienced disability attorney can review the policy and explain any complex provisions.


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

DOL Proposes Changes to ERISA

In prior posts, we have noted that employer-sponsored disability plans are generally governed by ERISA. We have also discussed some of the challenges claimants may face when filing a claim under ERISA.

Recently, the Department of Labor (DOL) proposed some new regulations that could make filing a claim under ERISA more claimant-friendly. If finalized, the regulations will change several aspects of the claims process under ERISA. Some of the most notable changes are as follows:

  • At both the initial claim stage and the appeal stage, insurers will have to provide a detailed explanation for their denial, including their bases for disagreeing with the claimant’s treating physician, the Social Security Administration, and/or other insurers who are paying benefits under other policies the claimant may have.
  • Insurers will have to notify claimants at the initial claim phase that the claimant is entitled to receive and review a copy of their claim file (right now, insurers only have to do this at the appeal stage).
  • During the appeal stage, insurers must automatically provide claimants with any new information that was not considered at the initial claim stage so that the claimants can review and respond to the new information.
  • If an insurer violates the new rules (and it is not a minor violation) claimants can file suit immediately and the court must review the dispute de novo (i.e. without giving special deference to the insurer’s claim decision).

Some of these rules have already been established by case law, but as of right now, they are not uniformly applied across the country. If the DOL moves forward and finalizes the regulations, insurers and plan administrators will have to uniformly comply with these new rules when administrating ERISA claims.

Are Insurance Companies Discriminating Against Mental Health Claims?

In previous posts, we have noted that disability policies often limit the disability benefits available for claimants who suffer from mental health disorders. For example, many policies limit recovery under a mental health disability claim to a 2 or 3 year period. In contrast, most policies provide benefits for physical disability claims to age 65, and some policies even provide lifetime benefits for physical disability claims.

Recently, Representative Ruth Balser has introduced a bill in the Massachusetts state house that would prohibit insurance companies from treating behavioral health claims differently from physical impairment claims. According to Representative Balser, offering shorter benefit periods to claimants with mental health disorders is discrimination.

Supporters of the bill contend that the way that disability insurers currently handle mental health is based on stigmas and ignores available treatments options.  Supporters of the bill also argue that the bill will reduce government costs because individuals with mental health issues will no longer need to rely on Social Security or government welfare programs.

The insurance industry’s response is that requiring insurance companies to provide more coverage will cost businesses money because it will limit available options when buying insurance and force them to buy coverage that they do not want. The insurance companies also argue that the bill will actually result more people relying on government programs because they will not be able to afford the increased levels of coverage.

At the moment, the bill is still being considered in committee, so it has not yet become law. However, if the bill is ultimately passed, it could significantly alter the way insurance companies treat mental health disability claims, particularly if other states pass similar laws.

For more information, see