So you are eager to rush in and file your claim for disability benefits. That’s good. You do not want to wait too long to file your claim as you only have a limited time to file the claim, but STOP FOR JUST A MINUTE. There is one thing you must absolutely do before you file your claim: you must review your application for disability benefits.
I’m not talking about the insurance contract, the summary plan description, insurance brochure, or claim form. I’m talking about the paperwork you filled out with the insurance company in order to buy the insurance in the first place.
For some of you who have Long Term Disability benefits or Short Term Disability benefits as a fringe benefit with an employer, this chapter may not apply to you as you may not have filled out an application to purchase the insurance. However, for those of you that purchased an individual policy directly with an insurance agent/broker or insurance company, then this chapter directly applies to you.
Start with a call to your agent, broker, or insurance company. Request a copy of your application for insurance. Once you have your application in hand, review every answer you wrote in the application. Make sure every response is complete and accurate.
If one of your responses is inaccurate, the insurance company may try to cancel the policy by claiming the policy was based on a fraudulent misstatement. If the policy is cancelled out, then the insurance company doesn’t have to pay a dime under the policy.
I know what you are thinking: “The insurance company cannot try to cancel the policy if they’ve accepted my premiums, can they?” The answer is, “Yes; they can!”
The doctrine of law is called rescission. There is a section of most policies that contains an “incontestability clause”. This clause prevents the insurance company from voiding and canceling coverage due to a misstatement by the insured after a specific amount of time has passed. A typical incontestability clause specifies that a contract will not be voidable after two or three years due to a misstatement.
However, under most states’ laws, an insurer may rescind a policy that has been in effect for longer than the incontestability period of two or three years if the insurer can identify a material misrepresentation in the insured’s application that was intended to defraud the insurer.
In a case by the name of Dormer v. Northwestern Mutual Life Insurance Company, the court concluded that the disability claimant’s failure to fully disclose her history of chronic fatigue syndrome, Bell’s palsy, and back pain when applying for disability insurance constituted an intentional and material misrepresentation and permitted the insurance company to rescind her disability policies and not pay her any disability benefits.
You must closely review your application. Did you tell the complete truth? Did you make any misrepresentations about anything?
Problems in this area most commonly arise when you yourself did not complete the application. You may have filled out the application in an insurance agent’s office, with the insurance agent asking you the questions and paraphrasing your answers on the application form. If the paraphrasing is inaccurate, then the insurance company may seize upon the inaccuracy to cancel your policy.
Or, the insurance agent may have misheard one of your responses, or misunderstood you. Again, you don’t want these types of inadvertent errors to destroy your disability claim before you even begin the process.
The good news is that these types of errors can be fixed. You should fix any errors before you file your claim form for disability. It is strongly recommended that you have someone such as a long term disability attorney experienced in handling disability claims go through your application with you.