Disability Insurance Planning: Don't Expect Claims Process to Be Easy
The article
"Disability Insurance Planning for Professionals" by
Lawrence B. Keller and Harry Wigler (December 2007) was very
informative. Let me add some real life experience to the discussion.
The authors hint at the leverage that the insurance companies have in
determining ultimate benefit payouts when they discuss the "any
occupation" definition as being up to the insurance companies to decide.
This is the tip of the iceberg. The insurance companies hold a very
strong hand when it comes to determining whether or not a claimant
receives any benefit. They will show no mercy in interpreting the policy
so that they pay little or no benefit.
If you are unfortunate enough to need to make a claim on your disability
policy, specifically for a permanent disability, keep in mind the
following:
- Do not delay in making the claim; delay can be interpreted by the
insurance companies as proof that you were not really disabled, just
unwilling to keep working. Delay can also negatively impact the earnings
baseline used to calculate your drop in earnings due to disability, and
your ultimate benefit.
- Put yourself under the regular care of a doctor specializing in your
disability. Self-medicating and denial of your disability is fuel for
insurance companies to deny your claim of a true disability.
- Check out the qualifications of the doctors that the insurance
companies send you to for their independent assessment; this may give
you leverage when negotiating your ultimate benefit.
- Find a qualified attorney to represent you, one who specializes in
disability claims such as yours.
- Don't expect to receive the monthly benefit that you paid for. If the
insurance companies do agree to pay, they prefer to pay a lump-sum
settlement so that they avoid the long-term recurring impact on their
financial statements. Having a strong disability insurance policy is an
excellent part of a financial plan. But don't count on the claim process
being easy.
J. B. Martin, CPA
New York, N. Y.