Glossary

Illness

Many policies distinguish between a disability caused by injury versus one caused by illness/sickness. Disability due to illness is typically defined as a sickness or disease that firsts manifests itself on or after the effective date of a policy, while it is in force. Under some disability policies, the amount and duration of benefits is determined based on whether a disabling condition is classified as an injury or as an illness.

Click here to learn more about how your policy may treat disabilities due to illness different than disabilities due to injury.

In-House Medical Consultant

These are doctors who are paid by the insurance company to review your medical records and look for ways that the insurance company can deny your claim.

Incontestability Clause

An incontestability clause precludes insurance carriers from inquiring into representations made on the policy application once the policy’s incontestability period has lapsed.  Typically, the incontestability period will last for two years from the effective date of the policy.  Once this time period has expired, the insurance company loses the ability to rescind the policy based on representations made in the policy application’s paperwork.

Click here for more information about incontestability clauses.

Independent Medical Exam (IME)

An IME is an exam conducted by a doctor to verify whether you are truly disabled under your policy’s terms.  Insurance companies often require claimants to undergo IMEs in the hopes that they will be able to use the IME results to deny or terminate benefits.  Although IMEs are supposed to be “independent”, the doctors performing them are almost always selected and paid by the insurance company, and many insurance companies use the same IME doctors over and over again, because they know that those doctors will generate reports that favor the insurance company’s interests.

Click here for more information on IMEs.

Individual Disability Insurance Policies

Individual policies fall into two categories: “general” and “occupational.”  A general disability policy insures against sickness or injury that precludes the insured from performing all work, while an occupational policy provides relief if the insured cannot perform the material and substantial duties of his or her own occupation. Thus, an occupational policy will provide greater coverage to the insured, who will be entitled to benefits even if he or she is able to engage in another occupation. Individual policies usually provide coverage in set amounts, (e.g., $5,000 per month) rather than as a percentage of the insured’s salary.

Click here for more information about different provisions that can be included in individual disability insurance policies. 

Injury

Many policies distinguish between a disability caused by injury versus one caused by illness/sickness. Disability due to injury is typically defined as accidental bodily injury that occurs on or after the effective date of the policy, while it is in force. Under some disability policies, the amount and duration of benefits is determined based on whether a disabling condition is classified as an injury or as an illness.

Click here to learn more about how your policy may treat disabilities due to injuries different than disabilities due to illness/sickness.

Key Person Policy

A “key person” policy reimburses a business for financial loss due to the disability of a “key person” (i.e. someone who it would be impossible to replace due to their skill, customer base, knowledge or burden of responsibility).

Click here for more information about “key person” policies.

“Legal disability” is a legal term of art used to refer to situations where the law does not allow a person to engage in his or her profession, even though he or she may be physically and mentally able to do so.  Some examples include incarceration, revocation or suspension of a professional license, and practice restrictions imposed by a licensing board.

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

Lump-Sum Buyout

A lump-sum buyout is essentially a settlement of your claim, where the insurance company agrees to pay you a certain sum and you agree to release them from any further obligation to pay you disability benefits.  If your claim ends up in litigation, the insurance company may offer a buyout in order to avoid the risks, costs and time associated with the lawsuit.  Outside of the litigation context, insurance companies typically will not offer buyouts unless they believe that you are totally and permanently disabled.

Click here for more information about lump-sum buyouts.

Material and Substantial Duties

In own occupation policies, this term is typically used to describe the key/characterizing duties of your occupation or specialty. Many individual policies will consider you totally disabled if you are unable to perform these duties.

Click here for more information about how “material and substantial duties” are used to define total disability.

Medical Examination

When you apply for disability insurance, many companies require a medical report and/or examination.  The insurance company then reviews this information to see if you are suffering from any conditions that could potentially cause a future disability.  If you are, the insurance company will likely add a rider to your policy that specifically excludes the reported conditions from coverage under your policy.

Mental Disability

Mental disorders, such as severe depression, anxiety, PTSD, etc., can cause total or partial disability.  Whether or not you will be able to collect disability benefits as a result of a mental condition depends on several factors, including the terms of your policy, the nature of the mental condition, and the duties of your prior occupation, among other things.  

Insurers often deny mental disability claims on the ground that the claimant’s subjective symptoms do not provide objective, verifiable evidence of disability.  In addition, even if your claim is approved, the amount of time that you are able to receive benefits may be drastically reduced if your policy contains a mental illness limitation provision.

Click here for more information about mental illness limitation provisions and the unique challenges of mental disability claims.

Mental Illness and Substance Abuse Limitations

Many policies—especially group policies and employer-sponsored plans—limit the period of time that you can collect benefits if your disability is caused by a psychological, behavioral or emotional disorder and/or substance abuse.  Typically, benefits are limited to a period of 24 months, unless the insured is confined to a hospital.

Click here for more information about mental disorder and substance abuse limitation provisions.

Minimum Monthly Benefit

Some policies—most often group policies and employer-sponsored plans—contain offset provisions that reduce your total monthly benefit if you are receiving benefits from other sources, such as Social Security disability benefits or Worker’s Compensation benefits.  Typically, these policies will also contain a provision that states the minimum amount you will be paid as a monthly benefit, regardless of the total amount of your other income benefits.  The minimum monthly benefit amount is typically a very small fraction of your total benefit amount.

Click here for more information about how offset provisions can reduce your monthly benefits.

Musculoskeletal Conditions

Injuries and disorders that affect the musculoskeletal system. Common examples include carpal tunnel syndrome, thoracic outlet syndrome, degenerative disc disease, and herniated discs. These can be caused and/or exacerbated by repetitive motion and stress, such as that required in clinical dentistry and other surgical professions.

Click here to learn more about why disability claims based on musculoskeletal conditions are often targeted for denial/termination.

Neuropsychological Evaluation

A method of testing where an evaluator seeks to obtain data about a subject’s cognitive, behavioral, linguistic, motor, and executive functioning in order to identify changes that are the result of a disease or injury.

Click here for more information on how neuropsychological evaluations could impact your disability insurance claim.

No Work Provision

A “no work” provision states that you cannot collect benefits if you are working in any capacity—regardless of whether your job is related to the occupation you were performing when you became disabled.  In most instances, the “no work” language will be included as part of the definition of “Total Disability” under your policy.

Click here for more information about how insurers use “no work” provisions to terminate benefits.

Non-Cancelable Rider

If your policy contains a non-cancelable rider, your insurer cannot change the terms of your policy or the required premium amounts as long as you submit timely payment of all premiums.

Click here for more information about the different types of riders that are frequently attached to disability insurance policies.

Offset Provision

Many disability insurance policies, especially long-term disability policies, contain offset provisions that reduce the amount of your monthly benefit if you receive income from other sources, such as Social Security disability or retirement, unemployment compensation, worker’s compensation, no-fault auto insurance, sick leave, severance pay, and others.

Click here for more information about how offset provisions can reduce your monthly benefits.

Overhead Maximum

This is a term that is used in Business Overhead Expense policies.  It represents the total maximum benefit payout, and is calculated by multiplying the monthly benefit by the number of months in the benefit period.