Does it matter whether you are considered Totally or Partially Disabled under your disability insurance policy if you are receiving benefits? Yes. This is because under many disability insurance policies, an individual with a Partial Disability will be paid only through the age of 65, while under the same policy, a Total Disability will allow the individual to collect benefits for the duration of their life. Moreover, Partial Disability benefits are based on the percentage of earned income lost. Thus, unlike Total Disability benefits, if the individual does not suffer a loss of earned income, benefits are not paid and in many cases, the contract ends after a few months. Moreover, in the event of a buy-out of the policy by the disability insurance carrier, resulting in the lump-sum settlement in lieu of periodic payments, an individual would be more apt to surrender the contract for less money than if the individual was deemed Partially rather than Totally Disabled. Insurance companies save themselves hundreds of millions of dollars each year by paying out Partial rather than Total Disability Benefits to their claimants.
Under many policies you may recover benefits under either the Total or Partial Disability provisions. Total Disability typically means the inability to perform the substantial and material duties of your occupation. Often, if you are unable to perform one or more of your substantial and material duties, you are Totally Disabled. Partial Disability usually entails an individual that continues to work and perform most or all of the duties of his or her occupation, but due to a disability is unable to perform those duties for as much time or as often as he or she did in the past. Typically, you must suffer an income loss of at least 20 percent to collect a proportionate amount of benefits.
Under many policies you may qualify under both the Total and Partial Disability provisions, though you can only collect benefits under one. Often, insurance companies will attempt to assert that since you fall under the Partial Disability provision, you are not totally disabled. In most cases, your Total and Partial Disability provisions are separate and distinct, for which you likely paid additional premiums. As such, it is inappropriate to deny coverage under the Total Disability provisions, simply because you also qualify for Partial Disability.
Often, unaware claimants believe their insurance company’s assertions that because they are working in some capacity they cannot qualify under the Total Disability provision in their policy. For this reason, many claimants receive substantially less money than they actually deserve. Also, if claimants accept the insurance company’s designation of Partial rather than Total Disability for long enough, their insurance company can claim that the statute of limitation has run and the claimant cannot challenge the denial of Total Disability benefits in court. Likewise, many claimants continue to decrease their occupational duties has their condition deteriorates. If this goes on long enough, the claimant’s occupation will actually be considered to have changed. Thus, the claimant will have to prove that he or she is Totally Disabled from an occupation which involves substantially fewer occupational duties than previously, rendering the claim significantly more difficult to pursue.
Contract interpretation might be difficult for the layman. Insurance claims examiners can make mistakes in interpreting the provisions of your disability insurance contract and insurance companies have a financial incentive to apply unreasonably strict interpretations of policy provisions. Relying on the wrong interpretation could result in the loss of hundreds of thousands of dollars over a claimant’s lifetime. Always seek advice prior to filing a claim, appealing an erroneous decision, or accepting an offer to buy out your disability insurance contract. At Disability Insurance Law Group, we thoroughly analyze every policy to ensure that our clients are afforded the benefit of all provisions of their disability insurance policies.