How Long Does It Take to Get Benefits? – Part 1

You’ve made the difficult decision to give up practicing and file a claim.  You’re not working and you need to collect the disability benefits you’ve likely paid years of high premiums for.  So how long will you have to wait until your first benefit check arrives?

Unfortunately, the answer is not clear cut—it depends on the terms of your policy, your insurance company, the assigned benefits analyst, and the complexity of your claim, among other things.

Filing a Claim

Your policy should outline the requirements for filing a claim.  Typically, you must give notice of your claim to your insurer within a certain time frame.  If you miss this important deadline, the insurance company will typically claim that you have prejudiced its ability to investigate your claim, and use this as an excuse to delay making a decision on your claim.  Significantly, if you don’t provide timely notice, it can also foreclose your ability to collect benefits (depending on the circumstances, and the reason for the delay).

Once you file your claim with your insurer, they will then send claim forms to be completed by you and your physician.  Your policy should include a deadline for when your insurer must provide you with these forms (e.g. 15 days).  If they don’t provide you with forms within this time frame, most policies allow you to submit a written statement documenting your proof of loss, in lieu of the forms.   Again, there is a deadline to return these forms and failing to do so gives your insurer an excuse to prolong the decision-making process.

Elimination and Accumulation Periods

Your policy will also contain details about your elimination period.  This is the period of time that must pass between your disability date and eligibility for payment on a claim.  Generally, you must be disabled (as defined in your policy) and not working in your occupation during this time period.

Depending on the terms of your policy, this period does not necessarily have to be consecutive, but it does need to occur within the accumulation period also set out in your policy (for example, your policy might require a 90 day elimination period that must be met within a 7 month accumulation period).  You will not be eligible for payment until the elimination period has been fulfilled.  Typically, insurers won’t provide you with a claim decision until after this date has passed.

It is important to be aware of your elimination period, so that you can plan accordingly (and are not expecting a benefit payment to arrive right way when you are budgeting to meet living expenses, or debts like student loans).   Also, it’s important to keep in mind that receiving a benefit payment immediately following the elimination period is the ideal scenario.  In many claims, it takes much longer for a benefit to be issued.  In our next post, we will address some of the most common reasons benefit payments are delayed.

“Transitional Own Occupation” Provisions

In prior posts, we’ve talked before about how an individual disability policy with a true “own occupation” provision is ideal.   Under this type of provision, you are “totally disabled” if you are no longer able to perform the material and substantial duties of your occupation (for example, you can no longer perform dentistry), and you can still work in a different field and receive your full benefits (if you are able and choose to do so).

Most doctors looking for a disability policy know that it’s important to get an “own occupation” policy, but may not realize that there are several, less-favorable provisions that are also styled as “own occupation” provisions.  These provisions contain the phrase “own occupation,” but also contain language that can dramatically impact a doctor’s ability to collect.  For example, a policy might provide benefits if you are no longer able to work in your occupation, but only if you are not working in any other occupation.   And some newer disability policies actually require you to work in another occupation in order to collect benefits.

Another type of restriction we’ve been seeing recently is a “transitional own occupation” or “transitional your occupation” policy.  As we stated above, under the true “own-occupation” policies prevalent in the 80’s and 90’s, you can work in another profession and still collect full benefits, regardless of whether you make less, the same, or more than when you were practicing.  With “transitional own occupation policies”  or “transitional your occupation policies,” you can work in another profession, but your benefits are reduced if your total income (from your benefits, employment, and other insurance benefits) ever exceeds what you made immediately prior to your disability.  So, with these types of policies, your earning potential is essentially capped at what you were making before you became disabled (if you want to keep receiving benefits under your policy).

Transitional own occupation policies may seem attractive because they may have lower premiums, but it is important to know that they are not the same as true “own occupation” policies, and they can result in a reduced benefit payment and/or limit your options if a lucrative employment opportunity should ever arise.

While many policies contain the phrase “own-occupation,” including “transitional own occupation” provisions, 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 he/she is selling to you. Additionally, most of the newer disability policies now contain language saying that you cannot rely on an agent’s statements and/or that agents cannot change the terms of a policy.  Consequently, you should always read a policy from start to finish and make sure you have a clear understanding of what you are buying, before purchasing a disability policy.