Disability Insurer Profiles: Guardian

In the last few posts, we’ve looked at a few of the most common disability insurance companies for doctors.  See our profiles of MassMutual, MetLife, and Northwestern Mutual.  Guardian is another disability insurer that specifically markets its policies to physicians and dentists.

Guardian has been around for over 150 years and is one of the largest individual disability income insurance providers in the United States. Guardian’s business model emphasizes the need for continuous growth, and Guardian reports that it has paid out dividends to its owners every year since 1868. To reach its goal of uninterrupted growth and live up to its owners’ expectations that it will pay out dividends each year, Guardian must not only maintain its past levels of profitability, but also come up with new ways to be more profitable. Obviously, from Guardians’ perspective, denying high paying claims submitted by physicians and dentists is an attractive method of increasing its profits.

Company: The Guardian Life Insurance Company of America.

Location: New York, New York.

Associated Entities: The Guardian Insurance & Annuity Company, Inc.; Berkshire Life Insurance Company of America; Guardian Investor Services, LLC; Park Avenue Securities LLC; RS Investment Management Co. LLC; Reed Group, Ltd.

Assets: $84.1 billion in 2013.

Notable Policy Features:  Guardian policies oftentimes attach a “Residual Disability Rider” to their policies. This rider could impact you in significant ways if you are partially disabled and considering part-time work. For instance, the residual disability rider to your policy might contain the following provisions:

Income. Income means your gross earned income, less business expenses, but before any other deductions. It includes salaries, wages, fees, commissions, bonuses, business profits or other payments for your personal services.”

“Prior Income. Prior income means your average monthly income for the tax year with the highest earning in the three years just prior to the date on which you became disabled.”

“Current Income. Current income means all income which you receive on a cash basis in each month while you are residually disabled.”

“Loss of Income. Loss of income means the difference between your prior income and your current income.”

“Residual Indemnity. Residual indemnity  =  (loss of income/prior income)  x  monthly indemnity.”

“Termination of Residual Indemnity. Residual indemnity will stop when the first of the following events occurs:

  • you become totally disabled; or
  • the benefit period ends; or
  • your loss of income is less than 20% of prior income . . . .”

When read together, these provisions essentially mean that if you are partially disabled and working in another occupation, Guardian includes the additional income earned in that occupation when determining your current monthly income. This is important because you could lose your residual disability benefits if, after adding in your additional income, your loss of income amounts to less than 20% of your prior income. If you have this residual rider in your policy, you should be aware that accepting part time work could jeopardize your ability to collect residual disability benefits.

Read more about residual disability benefits.

Claims Management Approach: Like many of the other insurance companies we have profiled, Guardian frequently conducts in-home field interviews, in an effort to catch you off guard and observe you in a state of activity that may not accurately reflect the severity of your condition. In-home field interviews also allow Guardian to collect personal information, such as your daily routine, hobbies and interests, names of friends and family, and work hours, so that its private investigators can more easily conduct surveillance of you.

If your claim involves a psychological disability, Guardian will likely require you to submit proof that you are being treated by a PhD level therapist, even if you have been working with a non-PhD level therapist for a significant period of time. Consequently, if you have a Guardian policy and are in need of therapy, you might want to consider consulting with a PhD level therapist from the start.

A final tactic frequently used by Guardian is the peer-to-peer call, which consists of Guardian directly contacting your treatment providers over the phone without your consent. This tactic is similar to the in-home field interview in the sense that it is an attempt to catch your treating physicians off-guard by ambushing them with detailed questions about your disability. Since these discussions take place over the phone, your treating physicians will likely not have an opportunity to provide well thought out, thorough answers, and there will likely be little, if any, documentation of the call. Although this tactic is alarming, it is easily countered. As we explained in a previous post, peer-to-peer calls can be preempted in most cases if you have your attorney notify the insurance company that all communications with your treatment providers must be coordinated through your attorney’s office.

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

Disability Insurer Profiles: MetLife

Today we’re profiling another popular insurer that issues private disability policies to dentists and physicians: MetLife.

Company: Metropolitan Life Insurance Company, a.k.a. MetLife.

Location: New York, NY.

Associated Entities: MetLife, Inc. (parent company), General American Life Insurance Company, New England Life Insurance Company.

Assets: MetLife, Inc. held over $885 billion in assets as of May 2014, according to Forbes.

Notable Policy Features:  One thing to watch out for in MetLife policies is a limitation on benefits for mental disorders and/or substance use disorder.  Under the Limited Monthly Disorders and/or Substance Use Disorders provision of some MetLife policies, policyholders are only entitled to a total of 24 months of benefits for any mental or substance abuse disorder, such as depression, panic disorder, post-traumatic stress disorder (PTSD), bipolar disorder, and alcohol abuse or dependency.  The 24 month limitation is cumulative.  So, for example, if you have depression that disables you for 23 months, then start suffering from disabling alcohol dependency later in your life, you would only have one month of benefits still available to you.

Claims Management Approach: In its 2013 Annual Report, MetLife, Inc. reported that “unfavorable morbidity experience in our individual income disability business resulted in a $6 million decrease in operating earnings.”  In other words, in 2013, more private disability insurance policyholders experienced disabling illnesses or injuries than in years before, and that hurt MetLife’s profits.  In these situations, where an insurer is facing increased liability for benefit payments, we often see that insurer put additional resources towards managing claims.  In this way, the insurer can spend extra time and effort looking for ways to deny or terminate claims, with the goal of limiting its liability.

In our experience, one way that MetLife attempts to dispose of claims as quickly as possible is by ordering surveillance early on in the claim.  While some companies will wait until they have received more information before starting surveillance, MetLife has started following and videotaping claimants within weeks of the claim being filed.

With respect to its medical investigation, we have found that MetLife often follows a similar strategy to MassMutual’s.  The insurer will often attempt to have its own medical personnel schedule “peer-to-peer” telephone consultations with claimants’ treating physicians, with the aim of catching the treating physician off guard and persuading them into saying their patient isn’t disabled.  However, we have found that, in certain circumstances, MetLife can be amenable to submitting medical questions to the treating doctor in writing instead.  That way, the treating doctor can more carefully consider the issues, without feeling pressured or put on the spot.

 

These profiles are based on our opinions and experience. Additional source(s): MetLife’s 2013 Annual Report; Forbes.com