The Evolution of Disability Policies
Part 7: Financial Examinations

In Part 7 of our series on how disability insurance policies have evolved, we’ll be taking a look at provisions related to financial examinations.

Most older policies give the company the right to request financial information from you, and say something along the lines of:

The Company may require proof, including income tax returns, of the amount of Earned Income for Periods before and after the start of disability.

Newer policies contain additional language that allow companies to be much more aggressive in what they can request, and can include provisions like:

We have the right, at our expense, to analyze or require an analysis of all relevant financial and operational records, including Your personal, business and corporate federal and state tax returns, as often as We may reasonably require by a financial examiner of Our choice. Such assessments may include analysis of business, financial, and operational records for any business in which You have or may have an ownership interest. We can require that Your accounting practices be the same as those which were in effect at the time You first became Disabled.

(emphasis added).

Further, many policies now have language that a claim can be denied or terminated if the requested audit of financial information is not provided. These provisions can be particularly onerous for professionals, who often have complex financial structures in place. And while, in certain instances, financial information may be relevant to a disability claim, these sorts of requests are sometimes used to engage in unwarranted fishing expeditions and/or as a tactic to delay making a claims decision. Consequently, it is important for professionals to approach requests for financial information in an informed manner.

Every claim is different, and these are just some examples of financial examination provisions taken from different policies. Your policy may contain different and/or additional language that could impact your particular situation.  If you are unsure about the terms of your policy, or how a provision applies to your specific situation, you should contact an experienced disability insurance attorney.

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