Disability income insurance claims have increased dramatically over the last several years. It seems that there are also a large number of claim being denied. Insurance companies claims departments have been told to “tighten-up.” Claims that would have once been routinely paid are now being denied due to industry trends, misunderstandings, lack of consumer knowledge, inability to contest, and lower returns on investment. So, it is important to look at the company behind the policy when making your decision. For my money, I would rather go through the underwriting process when I apply and not when I might file a claim and hold my coverage with a financially sound company that has a long history of stability and positive claims payments.
1) Elimination period not being satisfied, either due to the inadequate number of days or days not being consecutive as required by a number of companies.
2) Definitions, terms, conditions for benefits to be paid not satisfied (e.g., total disability or residual disability). There is no “standard”, industry definition. Each carrier defines what constitutes disability under their contract.
3) Renewability (Is the policy both guaranteed non-cancellable AND guaranteed renewable. Ask us how these terms differ.
4) Exclusions or Riders (these could be medical, such as exclusions for back due to recent back surgery or occupation)
Another major reason for claim denials has to do with misstatements or omissions which have been made on the application by the insured. Misstatements or omissions are usually unintentional — a result of poorly worded questions on the application, perhaps. Some critical areas of the application which affect a claim and could be answered incorrectly or dishonestly have to do with occupation/duties, health, income, and other pertinent facts such as avocations. Incidentally, some of the honest mistakes might be overlooked, by the insurance company, after two years, as outlined in the contract’s incontestability clause unless there is other wording to override that clause. Most companies have a much more difficult time proving fraud, but fraud can extend the contestable period for many years, way beyond most carrier’s two year contestable period.
What may not be overlooked, however, are fraudulent statements or omissions such as major misstatements regarding health or income. Keep in mind that your agent can play an important role in the completion of the application and explaining the contract provisions. A good agent should want you to understand what is not covered almost as much as what is covered, or how it is covered.
Auto-Owners Insurance and the Kasmann Insurance Agency have established an extensive number of clients and years helping our client that have unfortunately had to file Long Term Disability claims. The claims have been paid by Auto-Owners as we had explained and although our clients are not happy that they are disabled, they are quite happy with the product and service over the years.
Contact us so we can show you how you can secure Long Term Disability that will not open you up to surprises at claims time.