Long-Term Disability Insurance Essential Guide

Long-Term Disability Insurance – What You Need to Know & What You Need to Do When Your Claim Gets Denied


Long-term disability insurance policies are typically taken out by high-income professionals and are designed to cover lost wages in the event the insured is disabled due to an accident or sickness and unable to work for an extended period of time, or perhaps forever.

For many professionals, the inability to work can be devastating as they depend on physical mobility, manual dexterity, high-level cognitive functioning and years of specialized training to perform their job. An injury or illness can change that – forever.  In its wake, there can be years of debilitating pain, reduced physical mobility, cognitive impairment, frequent medical visits, and a significant loss of income with the prospect of losing everything for which the individual has worked.

Why is long-term disability insurance so important? Consider the following data to better understand why many working professionals protect themselves with private long-term disability insurance:

  • 78% of American families live paycheck to paycheck with little cash reserves to cover an unexpected loss of wages, (CNBC, Jan. 2019)
  • Disabilities cause significantly more foreclosures on loans than death, at a rate of 16:1 (statila.com)
  • The United States Center for Disease Control and Prevention lists 1 in 4 Americans suffer from a disability (CDC website)

Unfortunately, securing a private disability policy and paying premiums regularly does not guarantee peace of mind. Imagine if, even after years of costly premiums , your insurance company denied your disability claim during your time in need? You purchased long-term disability insurance as a safety net, ensuring a vital source of income in the event of an illness or injury. Yet, with increasing frequency, insurance companies are denying claims. From a bottom-line perspective, it is not in the insurance company’s best interest to play claims in full, and many have devised tactics to either reduce or deny valid claims. When insurance companies wrongfully deny or delay claims of unsuspecting policy holders, they are acting in bad faith. 

Through this private long-term disability insurance guide we will:

  • Provide an overview of long-term disability insurance;
  • Explain in more detail the tactics used to deny private insurance claims;
  • Provide guidance on how to avoid these pitfalls, and
  • Highlight the importance of working with knowledgeable, experienced insurance lawyers, such as our team at Donahue & Horrow LLP

What is Long-Term Disability Insurance?

Long-Term disability insurance policies are designed to protect against the loss of your income when you become disabled due to an injury or illness. These policies are owned and paid for by individuals. If you receive private disability insurance coverage from your employer as part of your compensation, then it is a group policy, and in most cases will be covered by ERISA (Employment Retirement Income Security Act, enacted in 1974). This guide focuses on individual private long-term disability insurance. If you would like to learn more about ERISA, information can be found here.

Generally speaking, most disability insurance policies fall in the realm of long-term disability (LTD) insurance.  LTD protects an individual’s income for a number of years by paying out disability benefits like regular monthly paychecks once the elimination or waiting period is met. 

As private long-term disability policies are written expressly for the individual covered, and not for a group, it is important that the purchaser read the policy thoroughly and understand the often complex language contained within. Each insurance company writes their policies in their own way, and the language contained within often feels deliberately confusing. We strongly recommend policyholders carefully review the full text of their policies as there are likely to be many intricate rules that govern whether policyholder will qualify for disability benefits. Know the specific details of your policy before you submit a claim. 

What is the difference between Social Security Disability Insurance, an Employer-Paid Policy and Private Disability Insurance?

Social Security Disability Insurance 

Social Security Disability Insurance (SSDI) is a federal program that pays benefits to people who cannot work due to a disability and who qualify based on past earnings and the federal definition of disability. The federal definition of disability typically has a higher standard of proof than private disability.  Indeed, most people who file an SSDI claim are initially denied such benefits.

Some insurance companies require that policyholders file for SSDI prior to making a private disability claim. Policyholders may receive SSDI payments and private disability payments at the same time. However, it is possible that the amount of SSDI payments received will be deducted from the private disability claim, but this is policy-specific.

Employer-Paid Policy v. Private Long-Term Disability Insurance

The key difference between these individual and group policies is who makes the premium payment.  It is usually that fact alone which dictates how the policies are governed. Employer-paid policies are governed by ERISA, an American federal statute that protects the retirement assets of Americans by establishing a set of rules to be followed by fiduciaries in order to prevent misuse of plan assets. ERISA was enacted in 1974 to provide a minimum standard as insurance companies began operating across state boundaries, creating the need for consistent standards, regardless of where the policyholder resides.

A private, or individual, policy is simply that – one paid for by the individual instead of an employer. These policies are typically written for an individual based on that individual’s financial needs and circumstances. An employer paid plan (a group policy) tends to be more generalized and less customized to individual specifics.  

Regardless of the plan type, insurance companies tend to write policies in a manner that dissuades claims and often include complex provisions that many policyholders find difficult to understand. Potential and actual policyholders should always remember that insurance providers are almost always for-profit businesses and have a vested interest in protecting their bottom line. Creating highly-nuanced policy language that is difficult to interpret and, worse, difficult to follow when making claims, often benefits the insurance company to the detriment of the individual policyholder. 

At Donahue & Horrow, we focus both on private disability insurance matters and Employer Paid Policies (ERISA). Accordingly, we can tell you whether or not your policy is governed by ERISA. If you believe that you have a disability insurance issue, please contact us for a free consultation.

Benefits Under Private Long-Term Disability Insurance Policies 

Generally speaking, private disability insurance policies contain two different features of disability benefits – “own occupation” disability benefits and “any occupation” disability insurance benefits.  (Although your policy may just contain one of these definitions of disability.) 

What is the Difference Between the ”Own Occupation” and “Any Occupation” Definitions of Disability?

As we’ve covered, there are different types of private long-term disability policies. An “own occupation” insurance policy covers individuals who become disabled and are unable to perform the material and substantial duties of the occupation in the usual and customary manner.  For professionals with a sub-specialty, the ability to perform that sub-specialty is what is covered. For example, a doctor who specializes in surgery would be entitled to disability benefits if he or she could no longer before surgery, even if she could still work as a general practitioner. Even if they decide to move to a different occupation, disability benefits may continue.  .

A common feature of own-occupation policies is that the insured must be employed, including self-employment, and working in this field at the time of the disability.

Under most “any occupation” definitions of disability, what matters whether your injury or sickness prevents you from returning to work in any occupation for which you are reasonably qualified based on your education, training and experience.  Even if you can no longer do the job you were performing before you disability, if you can perform the duties of a different job (that pays a salary reasonably close to you first job) you will not be considered disabled.  

Consider the hypothetical case of an orthopedic surgeon who has injured their hand and can no longer perform surgical duties. The surgeon would be considered totally disabled – a true own-occupation policy would allow them to receive benefits as a totally disabled individual. In addition, they would be allowed to take up another profession or practice area while collecting disability benefits along with the salary they earn as, say, a university lecturer.   However, under an “any occupation” definition of disability, the ability to work as a university lecturer would mean that the person does not qualify for disability benefits.

It is also important to note the California case law will also play a role in determining whether you are eligible for benefits under the policy.  Under California law, “the term ‘total disability’ does not signify an absolute state of helplessness but means such a disability as renders the insured unable to perform the substantial and material acts necessary to the prosecution of a business or occupation in the usual or customary way.  Recovery is not precluded under a total disability provision because the insured is able to perform sporadic tasks, or give attention to simple or inconsequential details incident to the conduct of business.”  Erreca v. Western States Life Ins. Co., 19 Cal.2d 388, 396 (1942).  

Standard Clauses May Lead to Private Disability Insurance Claim Denials

Insurance companies deny claims for a host of reasons. Most claim denials tend to fall into the following areas:

Policy Limitations: Clauses and definitions in the policy that either expressly limit coverage and/or enforce time limits on payments.  These include:

    • Existence of a pre-existing condition.  If  the insured knows that they have an issue prior to the policy creation, for example back pain diabetes, or a heart condition the claim is like to be denied. 
    • Material misrepresentation in the original application. Each private disability policy is specifically written for the insured.  When applying the insured must provide accurate personal information from which the policy with be written. A material misrepresentation of information provided in application may be disqualifying.
    • Age time limits set within policy. Most private disability policy payments will only continue until a certain date, usually when the person turns 65.
    • Standard coverage exclusions built into the policy. Most policies will have specific activities which if performed by the individual and is the cause of the disability will void the policy.  Some examples of this include: intentional self-harm, voluntary engagement in dangerous activities and drug use.
    • Additional examinations required. Not really a policy limitation, but it is not uncommon for insurance companies to require additional examinations from their preferred physicians to confirm the diagnosis.

Insufficient Medical Support for the Claim:  Under this scenario, an insurance company claim department deems that there is not enough evidence to support payment of a claim. These include:

    • No Regular medical treatment – Failure to schedule and attend regular appointments which would have mitigated the disability.
    • Missing records – They will want full records and routinely re-request information provided – if possible you should journal everything from the onset of the disability
    • Doctor’s statement – Before submitting a claim, you should request a comprehensive statement from your attending doctor.  The insurance company will do their own investigation and may never contact the doctor.
    • Case File Review – medical professionals working for the insurance company will review your case files and may not even contact the attending physician. The patient’s physician will be discredited based on an insurance company physician, also called an independent medical examiner (IME). It is common for an IME to rely on the medical records of an attending physician while conveniently not speaking directly with the attending physician.

Surveillance/Social Medial Research – investigators hired by insurance company produce evidence that contradicts the claim.  This can be done remotely and without your knowledge. These include:

    • Video Surveillance – Insurance companies routinely hire local investigators who record the insured hoping to catch them doing things that are expressly against doctors’ orders – e.g. not walking with a cane, lifting a package from the doorstep, carrying groceries in from the car, playing with a grandchild.  Surveillance usually occurs over three consecutive days, but there is no limit to how often an insurance company can have an investigator follow you and your family, videotaping every move.
    • Social Media – is no longer just for family and friends to catch up; it is an effective tool used to regularly deny claims.  People typically present their lives is the best way possible on Social Media, and insurance companies use those posts to argue that the person is not as injured as they claim.

Insurance companies actively manage their bottom line and generally hire investigators to aggressively question everything – including past medical records – in order to deny claims. Unfortunately these practices often come at the expense of the health and well-being of policyholders.

At Donahue & Horrow, we have experience fighting unfair and underhanded tactics. Our strong track record of recovering benefits on behalf of our clients speaks for itself.

Private disability insurance plans are diverse, complex, and replete with all manner of exclusionary conditions. Insurers write policies in complex and often confusing language that prioritizes claim denials. If you believe your insurance company is inappropriately and unfairly defining or limiting the benefits of your policy, contact Donahue & Horrow. The sooner you contact us, the better. We know the tactics insurance companies use to deny claims and help policyholders like you to avoid the pitfalls. Our first consultation is FREE.

Key Provisions In California Law

The state of California has specific and unique regulations that govern insurance claims. Some of the most important are listed below.

California Fair Claims Settlement Practices Regulations

California has led the way passing specific legislation to ensure that insurance policyholders are treated fairly by national insurance companies.  Some of the specific language in place includes “California Code of Regulations,” Title 10, Chapter 5, Subchapter 7.5

  • “Where an insurer denies or rejects a first party claim, in whole or in part, it shall do so in writing and shall provide to the claimant a statement listing all bases for such rejection or denial and the factual and legal bases for each reason given for such rejection or denial which is then within the insurer’s knowledge.”
  • “(d) Every insurer shall conduct and diligently pursue a thorough, fair and objective investigation and shall not persist in seeking information not reasonably required for or material to the resolution of a claim dispute.”
  • “(g) No insurer shall attempt to settle a claim by making a settlement offer that is unreasonably low.”

Getting Organized

A denial of a private long-term disability insurance claim is the last thing you need when you’ve diligently been making payments for years and need the payouts to cover mounting bills and expenses.  So, it’s crucial that you organize your documentation before submitting your claim. Here are a few important suggestions prior to submitting your claim.

Not all policies are created equal. Read the fine print.  How is claim is reviewed will be determined by the specific language in the policy.  However, that language may vary depending on when the policy was purchased. Significant changes have occurred in the long term disability insurance industry and as costs have escalated, the provisions in the respective policies have become more restrictive.

Understand what your policy does and does not cover. Each private disability insurance policy is written specifically for the person insured and may have unexpected nuances.

Written confirmation required. Your physician should provide written confirmation of your diagnosis and related restrictions and limitations, and that information should be included in the documentation submitted with your claim.

Include lots of evidence. The more the better. This includes all updated medical records, test results, x-rays, MRIs, daily care notes from physical therapists, , and your own daily diary that chronicles your symptoms such as pain, fatigue and other restrictions and limitations. 

All post-submission communications must be in writing. Once you submit your claim, make sure all communication with the insurance comp is done in writing. If that’s not possible, get the name of the insurance representative and follow-up in writing confirming the conversation and main points that were discussed. This will provide you with an audit trail should you need it to defend a claim denial.

The Waiting Game

Once you have submitted your claim, be ready for your insurer to repeatedly request additional information.  They may even ask you to be examined by a physician on their choosing. Usually, the policy language will require that you submit to such an examination.  Understand that the doctor they choose will be paid by the them, so you know where that doctor’s loyalty will lie. If that happens, you should consider recording or having a family member present at the examination to make sure the doctor’s report is accurate.  An attorney can help you figure out your best course of action when presented with such a request. 

Insurance companies are famous for stalling claims. Their hope is that you will give up. Don’t. 

Here are a few well-known strategies that insurance companies use to stall or deny a claim:

  • They’ll loosely interpret the terms of the policy to their advantage.
  • They’ll say they did not receive certain documents.
  • They commonly use their own doctors to justify a denial of your claim.
  • They will conveniently refrain from telling you about the scope of your benefits.

Fight for what you deserve. Many insurers intrinsically understand that the policyholder is in distress and vulnerable. They will use those vulnerabilities to their advantage. That’s where Donahue & Horrow LLP can help to get what you have faithfully paid for – and rightfully deserve.

Your Private Long-Term Disability Insurance Claim Has Been Denied. Now what?

The attorneys at Donahue & Horrow LLP are highly experienced at helping claimants fight against private disability claim denials, often referred to as insurance bad faith denials. If you believe that your claim has been inappropriately denied, you may be the victim of a bad faith denial. The sooner you contact us the faster we can get to work on your behalf. Remember,  the initial consultation is FREE.

Time is of the essence if you’ve received a denial. There are deadlines regarding your ability to appeal the decision or even file a lawsuit. Your insurance provider is hoping you will take the denial at face value and give up. Instead, considering the following:

CALL US IMMEDIATELY. The faster we can start working on the specifics of your case the better. Our initial consultation is FREE and unlike some insurance lawyers, you will meet with a partner even at this early stage. 

Some other things to consider:

  • Memorialize everything in writing – calls with the insurance company, medical visits and more – literally everything associated with your disability. From this point forward make it a point to request everything in writing including phone calls with the different parties at the insurance company.
  • Your denial will have specific instructions including the timeline for an appeal. It is important that you appeal within the allocated time or you risk having to start the claims process over again.  You many even lose your ability to sue for the benefits you are owed.
  • Make sure you have all updated medical records ready for the insurance company to review. This should include any objective testing, such as MRIs, X-Rays, CT Scans.
  • Get a letter from your physician and all licensed healthcare professionals involved in your care, to affirmatively state that you are disable and specifically state the treatment that you receive from them.
  • Keep paying your premiums! This will ensure that the policy remains in force while you consider your options. It also protects you from your policy lapsing, which could prevent you from ever receiving benefits.  

Call Donahue & Horrow:

With Donahue & Horrow LLP, you will receive compassionate and highly skilled legal representation. We know how hard it can be for a family and their loved ones when someone can no longer work and the family loses the benefits of a paycheck.  In addition to dealing with the medical changes, the loss of income can be emotionally and financially devastating. We believe that a denial is unacceptable when a person has faithfully paid for their long-term disability insurance benefits. When you reach out to us, we know that your dignity and respect are on the line. We will fight tenaciously to make sure you get what you deserve. Our team has helped hundreds of clients in California, successfully recovering over $160 million dollars in benefits. Contact us today.