Glossary of Terms in Long Term Disability Claims
Activities of Daily Living, or “ADL”s: The activities normally performed in daily living, including eating, bathing (or showering), dressing, grooming, homemaking, walking and leisure.
Accelerated Benefits: A clause in some insurance policies that enables the policy holder to receive the benefits before death. The insured may receive the benefits in part or in full. Accelerated benefits are typically reserved for those that are suffering from a terminal illness, have a long term high-cost illness, require permanent nursing home confinement or have a medically incapacitating condition. Accelerated benefits are also called living benefits.
Annualization of Waived Premium: If policy premium payment date falls during a period when premiums are being waived, then the entire year of premiums will be waived.
Any Occupation, or “Any Occ” for short: part of how “disability” can be defined. In this instance, the claimant will be considered disabled if he/she is unable to work in any gainful occupation for which he/she is qualified by education, training or experience. Compare: Own Occupation, or “Own Occ”.
Automatic Increase Rider: This rider increases the insured’s total monthly benefit each year for about five years. This rider applies without regard to any changes in health, income or occupation.
Benefit Period: The maximum amount of time the insured may receive benefits for a continuous disability. Typical benefit periods are: two years, five years or up to retirement age of 65, 66 or 67.
Benefit Percentage: The amount payable to the insured, based on a percentage of the insured’s income prior to disability. The benefits are typically limited to an overall maximum amount.
Contributory Plan: a disability plan in which both the employer and employee contribute to paying the premium.
Conversion Privilege: The right of an insured to convert benefits under a group long term disability insurance policy to an individual policy without requiring a physical examination to give proof of insurability.
Cost of Living Adjustment Rider, or “COLA”: An optional benefit that provides for increases in the cost of living during the period of disability. Typically this will be either a fixed amount, or tied to the CPI (Consumer Price Index).
Elimination Period (also called the qualifying period): the length of time the claimant must be disabled before benefits are payable. Also referred
to as “qualifying period” or “waiting period” by some insurance carriers. Common waiting periods are three or six months.
Material Duty (or duties):: the main set of duties and responsibilities (tasks or skills) required in a specific occupation. These are duties that cannot be reasonably omitted or modified without impairing the employee’s ability to perform his or her occupation. Material duties are used to help determine whether the employee is disabled under the long term disability contract. Small differences, such as “a,” “the,” “some,” and “all” material duties (or duty), can have an important impact whether a claimant qualifies for disability benefits.
Maximum Benefit: the maximum monthly benefit payable to the
disability claimant regardless of the claimant’s pre-disability income amount or percentage of income insured. Typically, maximums are $5,000 to $10,000 in benefits per month.
Minimum Benefit: the minimum monthly amount payable to the disability claimant after offsets are applied. The minimum benefit provision ensures that the claimant will receive at least a minimum benefit from the LTD insurance company. Typical minimum benefits include $100 or 10% of the LTD benefit amount – amounts may vary.
Offset: payments or benefits due or received by the claimant from another source that reduces the amount of LTD benefit payable. Offsets typically include other disability payments or benefits from sources such as Social Security and/or Workers’ Compensation. Note: Benefits from individual disability policies are typically not offset on group contracts.
Own Occupation, or “own occ” for short: part of how “disability” can be defined in a policy. In an “own occ” provision, a claimant will be considered disabled if unable to perform one, some or all of the material duties of his or her own regular occupation.
Partial/Residual Disability: most disability insurance carriers offer limited benefits to those who return to work part time or full time (with a decrease in the amount of earnings). This is typically done to encourage a return to the workforce. If the insured can work in a limited capacity and is earning less than a set level of income, he or she may be eligible for partial or residual disability benefits.
Pre-existing Condition: a medical condition that existed prior to the effective date of the policy and for which the claimant had consulted with a doctor or received any medical treatment. Individuals with preexisting conditions may not qualify for benefits from their group long-term policies for a specified
period of time, typically one year.
Pre-existing Condition Limitation: A limitation requiring a specified “treatment-free period” or period of time the claimant must be insured in order for known medical conditions to be covered under the policy.
Qualifying Period: See elimination period, above.
Rate of Benefit: describes the percent of pre-disability income the disability plan is intended to replace; typical rates range from 50% to 80%.
Reasonable Accommodation: any modifications to the employee’s worksite, the job or employment practices, which would allow the insured claimant to perform the material duties of the occupation and would not create an undue hardship for the employer. For example, a modified workstation or adaptive work equipment.
Recurrent Disability: this refers to periods of disability from the same cause or causes. If the claimant has satisfied the qualifying period, returns
to active work and becomes disabled again, some group LTD policies do not require that a new qualifying period be satisfied and consider the period of disability from the same or a related cause to be continuous unless separated by a recovery of six months or more.
Residual Disability: also known as “partial disability.” Residual disability allows a claimant to remain eligible for limited disability benefits while working in a limited capacity and earning less than the earnings test.
Self-Reported Symptoms (special conditions): symptoms that are self-reported by the claimant and that are not easily validated by objective testing. In most contracts, these can be used to limit the duration of disability benefits. Examples may include environmental allergic illness, chronic fatigue syndrome, Fibromyalgia, etc.
Special Conditions: See self-reported symptoms, above.
Total Disability: This will be defined in the disability policy. It defines the parameters used to determine if an employee is eligible for benefits because of a physical or mental illness or injury. There may be several levels to this definition:
- Own Occupation: Disability is initially determined by whether an employee can still perform the duties of his or her own job. If the insured cannot do his usual work, he or she may qualify for benefits. Insurance companies may use generalized job descriptions when evaluating the physical and mental demands of an occupation. This provision lasts just a short period of one, two or five years. After that, the policy may become more restrictive under an “any occupation” provision.
- Any Occupation: Under this definition of disability, the insured will be considered disabled if he or she cannot work in any occupation he or she is qualified for by education, training or experience.