Long-Term Disability Insurance Clauses To Look Out For

Long-Term Disability Insurance Clauses To Look Out For

Long-term disability policies are unlike any other type of insurance. As an employee, you often dont have the choice between several companies with different types of coverage.

Employees are typically stuck with whichever policy their human resources department has chosen for the company. And, while many companies pick responsible well-written policies, there are just as many businesses who choose the cheapest policy they can find.

Also, unlike your car insurance, homeowners insurance, or life insurance policy, which are subject to state regulation, there is absolutely no governmental oversight for employer-sponsored long-term disability policies.

Thats right, while your state has a whole department dedicated to reviewing and approving every other type of insurance policy imaginable flood, fire, casualty, car, boat, life there is not a single person whose job is to review the language in your employers long-term disability policy.

Even worse, recent decisions by the Supreme Court of the United States have practically granted immunity to these companies. In fact, according to the 8th Circuit Court of Appeals, the burden is now on a plaintiff to show that his plan administrator “acted dishonestly, acted from an improper motive, or failed to use judgment in reaching a decision.”

So Whos Looking Out For You?

The state hasnt reviewed the policy that your company purchased. You cant negotiate any of the terms of your policy on your own. Certain HR departments simply select the cheapest policy without reading the terms or consulting an experienced attorney about the consequences of those terms.

Get your disability insurance policy out right now. Sit down and actually read through it. If you find any of the following language in the policy, the policy isnt protecting you in the ways that you and possibly your HR department think it is. You may want to run and scream to your human resources administrator or find your own private policy if you see

Any language granting the insurance company “discretion” to determine your benefits

A definition of disability that requires that you not be able to perform “each and every” important function of your job before being paid benefits,

An “own occupation” period of less than two years,

Income protection of less than 60% of your prior years earnings,

Language terminating all benefits if you are “able to work part time, but dont”,

Blatant discrimination against the mentally ill,

Limitations on disabilities caused by so-called “self-reporting symptoms”,

Benefits that are contingent upon securing Social Security disability benefits, or

A limitation on benefits for fibromyalgia or chronic fatigue syndrome.

If these terms are in your policy it means one of two things. First, whoever made the decision to purchase your companys long term disability policy did not actually read the terms. Second, if they did read the terms, it usually means they didnt understand them. Why? Because your policy only bought you the illusion of protection.