Think You Have Coverage? What Your Policy Really Covers May Surprise You

Disability Insurance Industry News

Most of us do not spend a great deal of our time worrying about what would happen if we were unable to work. How would we pay our bills? If we did, we probably would have trouble leaving our houses. Here are a few reasons why you should spend a few minutes reviewing your disability insurance policy if you have one and what to look for if you don’t already have one.

It is most important to be prepared for disability before you are injured. Understanding what your insurance benefits may be, will help you plan so you can be ready if the unexpected happens. It may also tell you if you need to purchase additional disability coverage.

The scope of your coverage will depend on how your policy defines the terms within it. A recent article asked attorney, Michael Horrow, to examine a “common” employer or group disability insurance policy. According to Horrow, “total disability” is the single most important definition in the policy.


Different Definitions in Disability Insurance Policies

The definition of total disability is not standard and will vary from company to company and product to product. Total disability can be defined in different ways. Generally, it can refer to total disability where one is unable to perform the substantial and material duties of your own occupation commonly referred to as “own occupation” coverage. Or, it can refer to coverage if one is unable to perform “any occupation” for which you are reasonably educated, trained or suited. This is called “any occupation” coverage.

Under the own occupation definition of disability, an insurance company would regard you as being totally disabled and unable to perform the duties of your present occupation. Ideally, all of us would have disability insurance coverage that provided benefits if we were unable to perform our own occupation. However, disability insurance policies, depending on the quality and the amount of coverage purchased may not be that generous. Usually, group insurance policies obtained through your employer will include “own occupation” AND “any occupation” coverage with the “any occupation” coverage kicking in after 24 or 36 months. Horrow said that group insurance policies are typically worded this way.

Any occupation coverage, which regards you as being totally disabled where you are unable to perform any occupation at all, is the weakest form of disability insurance coverage and is not likely to provide you with the sort of insurance protection you truly need.

The definition of an occupation would seem straightforward to many people, but it is not. It may refer to what your job means in the national economy rather than what you actually do on any given day or the duties in your own occupation. The language of each policy is different so you will need to check.

How your policy defines earnings is another section you should examine. Group disability insurance policies in particular cover only base pay without commissions, bonuses or overtime pay. In addition, the insurance company will typically offset the monthly insurance benefit paid out if the policyholder receives any other benefits due to total disability, such as social security, workers’ compensation or state disability benefits.

Another critical definition has to do with when the benefits begin. The “elimination period” for most policies will be 90 or 180 days. If the insurance company takes processing time once the elimination period ends, this means that the average policyholder may have to wait four to eight months before receiving a check and there will be no payment for the elimination period.


An Ally When You’re Injured

Understanding the nature of your disability insurance coverage can help you get prepared before tragedy strikes. If you or a family member have been injured and are fighting with your insurance company to get paid disability insurance benefits or if you become sick from an unexpected illness, you should have a disability insurance attorney examine your case to see if you have a claim. Insurance companies can be tough to deal with, especially if you’re handling it alone. If your insurer is refusing to fulfill their end of the bargain, an experienced disability insurance lawyer will help fight for you rights.