When a career is affected by a disability, the sudden potential for financial instability can add substantial stress to an already emotionally difficult situation. For medical professionals who have devoted considerable time and money toward education, the abrupt disruption of an unexpected disability can be particularly disconcerting. Instead of focusing on personal treatment and recovery, you may find yourself pouring over stacks of medical bills and school loan delinquency notices. Fortunately, a solid disability insurance policy can shield your future from this risk, allowing you to meet your financial obligations as well as maintain your standard of living.
In this article, I will be sharing some tips and recommendations that medical professionals should consider when selecting disability insurance, and I will also discuss what one should do if a long-term disability insurance claim is wrongfully denied. It’s important to note that I am not an insurance provider, nor am I affiliated with any insurance company. In fact, I’ve built my career on fighting back against insurance companies that have acted in bad faith. The information provided in this article is from the perspective of an attorney who has seen the very worst damage that insurers can inflict, and it’s my hope that my experience can help you avoid some of the most common pitfalls that affect so many.
Choosing A Long Term Disability Policy
First Things First
The single, most critical language you’ll find in a disability insurance policy is the wording that an insurer uses to define “disability.” With all of the resources you’ve invested into obtaining and cultivating your medical knowledge, your goal in purchasing disability insurance should be to protect the specific future you’ve designed. Therefore, you should find a policy that defines disability in a way that triggers benefits if you lose the ability to perform your particular job. Such a policy should stipulate that a person will be considered disabled if he or she becomes “unable to perform the duties of his or her own occupation.”
Alternatively, a policy may describe disability as not occurring unless and until a person is unable to perform any occupation. The result would be that you would not be entitled to benefits if, for instance, you could operate a tollbooth or collect tickets at a movie theater. As you can see, the difference between “own” and “any” in a disability policy is of utmost importance, and that’s why this is the first thing one should look for when considering a policy.
Group Versus Individual Policies
You may discover that your employer offers a group policy. Many employers will actually pay premiums for their employees, which is usually worth taking advantage of, although some group policies will limit the amount of coverage one can purchase if the insured already holds an individual policy. In general, these group policies come with lower premiums and often don’t require you to answer dozens of annoying questions about the current state of your health. However, many group policies increase your premium as you age, and most won’t allow you to keep your policy if you change employers.
Individual policies tend to come with higher premiums, but policyholders enjoy better benefits because they have been individually underwritten. Generally, group policies use the more conservative “any occupation” definition of disability, while individual policies usually employ the more liberal “own occupation” definition. Another added advantage of individual policies is that they are generally portable, meaning your coverage under the policy will continue if you take another job.
When To Buy
Obviously, it’s important to purchase a disability policy before becoming disabled; therefore, buying earlier is always safer. However, while wealth and age usually have a positive correlation (e.g. I have much greater buying power today than I did when I was 18), health and age tend to have a different relationship. Consequently, we’re less inclined to purchase insurance when we’re young and healthy and have much less in the way of financial resources. A good strategy for a young physician who is just entering a residency would be to purchase a modest policy that can be upgraded just before leaving residency.
How Much To Buy
Determining how much coverage to buy requires taking a close look at your personal finances. As a general rule, you should purchase enough to cover your living expenses, which may a far different figure than your income. In addition, your policy should match what your retirement savings will be if you work until the age of 65. Generally, payouts on disability insurance are not taxed, so it may not be necessary to include Uncle Sam’s share when you’re calculating your coverage.
When To Cancel
The basic purpose of disability insurance is to protect your income stream from the risk of disability. Therefore, it makes sense to cancel your policy when either:
- You no longer have the same income stream that you purchased the specific coverage to protect (e.g. You quit and joined the circus); or
- You’ve become so financially independent that you can use other sources as a means to protect your financial status.
When evaluating a policy, especially if you’re working with an agent that relies on commission, you’ll be introduced to a litany of insurance riders to upgrade the policy. The following includes some of the riders that I believe are worth considering:
- Cost Of Living Adjustment (COLA) – A COLA rider will increase your benefits in proportion to the Consumer Price Index while you’re on.
- Student Loan Rider – Such a rider will ensure that your student loan payments are covered while you are on claim.
- Retirement Protection – The purpose of this rider is to match any retirement savings that you might have lost while on disability. If and when you’re benefits are triggered, funds may be placed in an irrevocable trust that will pay out upon retirement.
- Future Purchase Option – This rider would allow a policyholder to increase their coverage over time as their income increase, without the need for additional medical underwriting. The downside is that these riders usually require higher premiums.
- Residual Disability – This rider provides supplemental income in the event that a disability only partially limits the policyholder’s ability to perform his or her job. The supplemental income a enables a person to remain gainfully employed as they are receiving treatment and working toward full recovery.
Request a Free Policy Evaluation
If you are considering purchasing a disability insurance policy or have recently purchased a policy, we will help you understand what you are entitled to and whether there are deficiencies in your coverage that could lead to a denied claim. It is easy for individual policyholders who are not trained to read insurance policies to misread or misunderstand the disability policy. As part of our evaluation, we will explain what everything means to you in your situation.
Some of the aspects of your policy we will review include:
- Total versus residual disability;
- Own occupation versus any gainful occupation;
- Mental and nervous disability benefit limitations; and
- Self-reported conditions benefit limitations.
When A Long Term Disability Claim Is Denied
“If you do nothing, you get nothing.”
The claim process is can be a long and difficult road, but your benefits are worth fighting for. All too often, policyholders procrastinate and fail to file their claims in time. Remember, when you purchase and sign your policy documents, you’ve entered into a contract with your insurer. Among other things, you’ve promised to submit your application for benefits and “proof of loss” within a specified period of time after becoming disabled. Failing to meet this deadline can result in a total forfeiture of benefits, so it’s important that you file your application immediately.
In addition, you’ll need to sign and deliver a medical release authorization form to your insurance provider. This permits your insurer to begin gathering any medical information they require for making a determination on your claim.
Denied? Don’t Give Up! File An Appeal!
There’s nothing that would make your insurance company happier than for you to happily accept their denial of your claim. This is why the appeal process is so difficult. Many insurers hope to wear claimants down until they return to work and entirely abandon all hope of receiving benefits. Some refer to this technique as “starving out” a claimant.
When a person is already grappling with the limitations of a medical condition, battling a big insurance company can be overwhelming, and this is why many claimants simply give up. Insurance companies are aware of this, and that’s why denial seems to be their first resort. Don’t give them the satisfaction! File an appeal, but be aware, however, that you have a limited time frame in which to file. Per the terms of your policy, you may have as little as 60 days after receiving notice of your denial to file an appeal, so don’t delay.
Has Your LTD Claim Been Denied?
Ortiz Law Firm provides aggressive, nationwide representation to claimants who have been wrongfully denied benefits by their Long Term Disability insurance provider. If you’ve been denied, we want to fight for you. All policies limit the period of time during which a claimant can appeal a denial, so don’t delay. Call (888) 321-8131 to request a free case evaluation.