Glossary

Cost of Living Adjustment (COLA) Rider

A cost of living rider is a policy provision that periodically increases the disability benefit amount to account for inflation and increased living costs. The amount of the increase can be determined by a fixed percentage or governed by the Consumer Price Index.  Typically, the adjustment is made every twelve months.

Click here for more information about COLA riders.

De Novo Review

This is a standard of review that is often applied in cases governed by ERISA, if the policy at issue does not contain a discretionary clause.  This standard of review is much more favorable than abuse of discretion review, because, under de novo review, the court is permitted to independently review your claim and is not required to grant the insurer’s decision any deference.

Click here for more information about when a de novo standard of review is applied.

Degenerative Disc Disease

A term used to describe changes to the discs of the spine that cause pain and discomfort, often including weakness, numbness, and tingling in the extremities. This condition is particularly common with dentists, due to the repetitive motions and static postures required by the profession.

Click here for more information about the prevalence of degenerative disc disease among dentists.

Denial of Benefits

Disability insurance claims are different from many other types of insurance claims because they are evaluated on an ongoing (typically month-to-month) basis. Consequently, even if a claim is initially approved, disability insurers can (and do) deny claims after previously paying several months of benefits.

Click here for more information about what to do if your disability benefits are denied or terminated.

Disability Buyout Insurance

This type of insurance policy provides benefits that a business or practice can use to buy out the shares of a co-owner or shareholder who becomes disabled.

Click here for more information about disability buyout policies.

Disability Insurance

Disability insurance is a type of insurance that pays the insured a monthly benefit if the insured is no longer able to work, due to an injury/accident or a sickness.

Click here for more information about the most common mistakes professionals make when it comes to the disability insurance claims process.

Discretionary Clause

Discretionary clauses grant insurers broad discretionary authority to interpret your policy and determine your eligibility for disability benefits.  If your disability policy contains a discretionary clause and your disability claim is denied or terminated, courts will generally be reluctant to overturn the denial/termination.

Click here for more information about discretionary clauses.

Dual Occupation Defense

When a professional that owns his or her own business files a disability insurance claim, the insurer will often try to exploit the claimant’s ownership status to deny total disability benefits.  For example, the insurer might argue that an insured is both a clinical dentist and a business owner.  The insurer will then argue that the insured is not actually disabled because he or she can still perform administrative or managerial functions, even if the insured cannot perform the duties of clinical dentistry.  This is sometimes referred to as the “dual occupation defense.”

Click here for more information about how an insurer may attempt to use a dual occupation defense. 

Earnable Income Quotient (EIQ)

EIQ stands for “earnable income quotient.” Your EIQ estimates how much income you will likely earn before you retire.

Click here for more information about how to calculate your EIQ.

Effective Date

The effective date is the day your policy becomes enforceable.

Click here for more information on effective dates.

Elimination Period

An elimination period is a period of time that must pass before the insurer will begin paying you your monthly benefit. Under most policies, the elimination period will not start to run until the insurer has established that he or she is disabled. Some policies also require the elimination period to be satisfied by consecutive days of disability. Most individual disability policies have an elimination period somewhere between 90 and 180 days.

Click here for more information about elimination periods and how long it can take to get benefits. 

Employee Retirement Income Security Act of 1974 (ERISA)

ERISA is a voluminous federal statute that governs disability claims filed under employer-sponsored disability policies.  If your disability claim is governed by ERISA, it is typically much more difficult to convince the insurer to approve your claim.

Click here for a detailed discussion of the negative aspects of ERISA.

Employer-Sponsored Disability Insurance Policies

This type of policy is typically the least expensive disability insurance policy.  This is in large part due to the fact that these policies are governed by the Employee Retirement Income Security Act of 1974 (ERISA) and typically contain provisions that make it difficult for an insured to collect disability benefits in the event he or she has to file a disability claim.

Click here for a detailed discussion of the different types of disability policies and the disadvantages of employer-sponsored policies.

Examination Provisions

Requirements under a policy that allow an insurer to require claimants undergo certain examinations or submit to testing, often medical examinations, financial examinations, and/or personal interviews. Over time these provisions have become more stringent, specific, and far-reaching, and most policies now state that a failure to attend a requested exam or interview provides the company with a basis for terminating your claim. At the same time, certain types of in-person exams may not be appropriate in a particular claim, either because the policy does not permit that type of exam or the exam is not reasonable under the circumstances.

Click here for more information about what to do if your insurer requests an in-person exam.

Exclusions

In the context of a disability policy, exclusions are specific conditions that are not covered by the policy.  For example, most policies will not provide benefits for disabilities that arise from war, the commission of a felony, or self-inflicted injuries.  Insurers will also commonly exclude preexisting conditions that are identified by an applicant’s medical history report or physical exam.

Factual Disability

“Factual disability” is a legal term of art that simply refers to the inability to work due to an illness or injury.  This is the type of disability that most people think of in connection with a disability claim.

Click here to learn more about the difference between “factual disability” and “legal disability.”

Field Interview

A face-to-face interview conducted by a representative hired by your insurer, typically at your own home or office.  During the interview, the representative will ask you questions about your disability, your prior job, your daily activities, etc., in the hopes of discovering information that your insurer can use to deny your claim.

Click here for a list of some of the reasons why your insurance company may be asking for a field interview.

Functional Capacity Evaluation (FCE)

An FCE is a formal examination that is generally performed by an occupational therapist (OT) or a physical therapist (PT), as opposed to a physician. Insurers use FCEs to gather information about a claimant’s capacity to perform certain physical tasks, such as lifting, pushing, pulling, carrying, reaching, stooping, kneeling, crouching, crawling, etc.  The person conducting the FCE will also typically record the claimant’s pain levels when engaging in each respective activity.  

Following the FCE, the insurer will compare the results of the FCE to the job duties required by the claimant’s reported occupation.  If the insurer believes that the claimant still has the capacity to perform his or her required job duties, it will deny or terminate the claimant’s benefits.

Click here for more information about FCEs.

Future Purchase Option Rider

A future purchase option rider (also known as a future increase option rider) permits the insured to increase his or her total monthly benefits on specific option dates, which usually occur on an annual basis.  In order to obtain the increase, you typically will have to pay an increased premium and provide proof that your earned income is sufficient to justify the increase in benefits.  However, this type of rider generally provides that the insured is entitled to the increase regardless of his or her health. This is significant because it means that the increases will not be subject to any additional exclusions, whereas you may have medical conditions that would normally be excluded from coverage if you were to apply for a brand new policy.

Click here for more information about how these riders work to protect your growing income. 

Group Disability Insurance Policies

Group disability insurance policies are policies that are made available to participants of organizations, such as members of professional associations, like the American Medical Association (AMA) or the American Dental Association (ADA).  Instead of providing a set monthly benefit amount, group policies typically confer benefits calculated as a percentage of the insured’s base salary (usually somewhere between 50% and 75%).  Group policies also often contain provisions that reduce the amount of benefits payable to the insured if the insured receives income from other sources, such as Social Security disability benefits or worker’s compensation.

Click here for more information about group policies.