Individual Disability Insurance

The attorneys of the Disability Insurance Law Group have prepared a brief guide to facilitate understanding of how private disability insurance works.

Summary of Individual Disability Insurance

Generally, individual disability policies are procured by the insured (or his/her agent), paid for by the insured directly and are not an employee benefit or business expense. Properly filing the claim, providing sufficient proof of loss and proper communication with the insurance company is a vital part of the application process.

If your claim is denied, in many states you may be required to submit a demand for payment to your insurance company prior to filing suit. Even if the law governing your state does not require you to submit a formal demand, doing so may often be a good idea.

Many denials or delays in payment of a claim can be overturned without ever filing a lawsuit, simply by bringing forth the right information and pointing out the flaws in your insurance company’s reasoning. This is often a more expedient, less frustrating and more cost effective resolution than immediately filing a lawsuit.

It is essential that you understand your rights and obligations under your policy and the law, as well as the tactics frequently employed by insurance companies to support a delay or denial of a claim before you proceed. Nevertheless, if your insurance company refuses to act reasonably, filing a complaint with your state insurance commissioner and ultimately a lawsuit in court may be necessary.

At Disability Insurance Law Group, we are known for our aggressive representation of clients in and out of the courtroom. Such clients include doctors, lawyers and other professionals. Insurance companies have their best interest in mind, someone should have yours. If you are considering applying for disability insurance benefits, have already applied and your claim has been denied or delayed, or are on claim and interested in a buy-out of your policy, we would be happy to provide you with a free consultation of your claim.

Types of Individual Disability Policies

Own Occupation Disability Insurance Policies — These policies have definitions that provide benefits if, as the result of sickness or injury, the insured is unable to perform the substantial and material (main, major, primary) duties of your regular occupation. Your regular occupation is usually defined as the occupation in which the Insured is engaged at the time he/she becomes disabled.

True Own Occupation Policies — These policies pay disability benefits even if the insured is working in some other occupation (even within the same field), provided he or she remains unable to perform the material duties of his/her own regular occupation.

Modified Own Occupation Policies — These policies limit the time benefits are payable under the own occupation definition and will not pay benefits if the insured is engaged in any other occupation – even if he/she is not able to perform the substantial and material duties of his/her own occupation. However, many states have limited this by state statute. Accordingly, even if your policy indicates that you are disabled if you cannot perform the duties of your regular occupation and are not working in any occupation, you may be able to work and earn income in an alternative occupation for a period of time and remain disabled under your policy.

Any Occupation or Gainful Occupation Coverage — Many group disability policies offered by professional associations, such as the American Medical Association, American Dental Association and American Bar Association, provide benefits under a true or modified own occupation definition for a limited period of time (typically two years). However, after disability benefits have been paid to the insured for that period of time, he/she only remains eligible for disability benefits if due to sickness or injury you are unable to perform the duties of any (gainful) occupation for which you are deemed reasonably qualified by education, training or experience. While this may seem extremely limiting, many policies contain language which indicates that the insurance company must consider the individuals actual qualifications, work experience and/or pre-disability income.

Options or Riders That May Be Part of Your Disability Policy:

• Future Increase Option – This option protects future earnings by providing automatic increases to the monthly disability benefit for a certain period of time, regardless of any health changes.
• Cost of Living Adjustment (COLA) Rider – After an insured has been on claim for one year, the COLA increases your benefits each year based on the increased cost of living measured by the Consumer Price Index.
• Residual or Partial Disability Rider – This provision allows the insured to return to work part-time and collect a partial disability payment based on his/her loss of monthly income. If the insured is unable to perform all of his/her occupational duties or able to perform each duty, but for less time then he/she could prior to the date of disability and has suffered at least a 20 percent loss of income (compared to the average monthly income earned within a specified time period prior to the date of disability) then the insured is entitled to a portion of his/her disability benefit. Often, a 50 percent loss of income yields 50 percent of the total benefit; but this is not always the case. Under many policies, a claimant may meet the definition of both total and residual disability. While the claimant cannot collect benefits under both provisions, eligibility under one provision often does not preclude eligibility under the other. Despite this, insurance companies frequently attempt to assert that because the claimant meets the definition of residually disabled, he/she cannot be totally disabled. This is because typically the benefits received under the residual disability provision are less than the total disability provision, and eligibility is often for a shorter period of time. Accordingly, it is essential that you understand the wording contained in your disability insurance policy.
• Waiver (Refund) of Premiums – The insured is not required to pay the premiums for the period he/she is disabled and following the waiting period and is reimbursed for any premiums paid during a period of disability.
• Social Security Insurance – In situations where the insured does not qualify for Social Security Disability Benefits under the guidelines of the Social Security Administration, this option pays some or all of the money the insured would receive from social security if he/she qualified for Social Security Disability benefits.

Additional Resources for Understanding Private Disability Insurance

If you are dealing with an individual or private disability insurance policy, you may find these links helpful:

• Filing a Claim Under an Individual Disability Policy
• Disability Insurance FAQs

Let Disability Insurance Law Group Help

If you have questions regarding an individual disability insurance policy or need help to file a claim or challenge a denial of benefits, contact our offices in Florida by email to arrange for a free initial in-person or telephone consultation. We will listen to your concerns, evaluate your case and advise you of your legal options.