Rescission in a long-term disability claim is the act of cancelling or voiding a disability insurance policy retroactively, meaning the policy is considered null and void from the start date of the policy. Rescission may occur when the insurer discovers that the insured provided false or misleading information during the application process, which would have affected the insurer’s decision to approve the policy or the terms of coverage.
For example, if an individual fails to disclose a pre-existing medical condition on their application for long-term disability insurance and later makes a claim for disability benefits related to that condition, the insurer may investigate the claim and discover the omission. If the insurer determines that the individual intentionally provided false or misleading information, the insurer may rescind the policy and deny the claim.
Rescission may also occur when an insurer discovers that the insured failed to meet certain policy requirements, such as paying premiums or submitting required documentation, which may void the policy.
Rescission can have significant financial consequences for the insured, as it can result in the loss of benefits and the repayment of any benefits received. In some cases, rescission may be challenged in court if the insured believes the insurer acted unfairly or improperly in cancelling the policy.
It is important for individuals applying for long-term disability insurance to be truthful and accurate in their application, and to disclose any relevant medical or other information that may affect the insurer’s decision to approve the policy or the terms of coverage.