Winning Isn't Easy: Long Term Disability ERISA Claims

Episode 14: What You Need To Know About Long-Term Disability Policy Riders, And How They Can Enhance Your Policy

December 07, 2020 Nancy L. Cavey Season 1 Episode 14
Winning Isn't Easy: Long Term Disability ERISA Claims
Episode 14: What You Need To Know About Long-Term Disability Policy Riders, And How They Can Enhance Your Policy
Show Notes Transcript

In this week's episode - Nationwide ERISA Long Term Disability Attorney Nancy Cavey talks about "What You Need To Know About Long-Term Disability Policy Riders, And How They Can Enhance Your Policy"  and much more!

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Nancy L. Cavey:

I'm Nancy Cavey, national ERISA and individual disability attorney. Welcome to a winning isn't easy. Before we get started, I've got to give you a legal disclaimer. This podcast is not legal advice. The Florida bar association says, I've got to say this. So I have said it, nothing prevents me from giving you easy to understand overview of the disability insurance world, the games t hat carriers play and what you need to know to get the disability benefits you deserve. So off we go today, I'm going to talk about what disability insurance writers you should have to enhance your disability insurance, the message you probably believe about disability a nd t rends agents and the truth. What every l ong-term disability policy holder has to know about exclusions in their disability insurance policy. We're going to take a quick break, but when we return, we'll get started, stay tuned.

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Nancy L. Cavey:

Welcome back. Ready to get started. Let's talk about what insurance writers you should have to enhance your disability insurance policy. Look, there are three ways that you can purchase your disability policy. First, your employer may offer you a disability insurance policy. Your employer is the sponsor. You're the beneficiary. Rarely do employer provided plans or policies offer you the opportunity to upgrade your benefits. The insurance word for upgrades are called riders . Now, if you have an employer sponsored disability plan or policy, one possible rider is the opportunity to increase your benefits from 50 to 60% or even to 66% of your earnings. At the time you became disabled, I suggest that you take the highest benefit possible. And I know that HR is not going to tell you that your disability benefits are going to be reduced by social security benefits that you or your family are eligible for. So you want to get the highest amount of disability benefits you can knowing that they're going to be deductions and reductions that will reduce the amount of your net benefits. Now, another way to get disability insurance is through a professional association like the American dental association, the American medical association, the Florida bar, or other professional associations that are related to your occupation. There are some pros and cons to purchasing policies from that type of an organization, but they're more flexible about riders than , uh , ERISA based policies and the third way, and the preferable way in my opinion is to buy your own disability insurance policy through an independent agent. Because there you can actually begin to customize a disability insurance policy that meets your financial needs. Now that type of policy will provide you with a greater financial peace of mind, but it's going to cost you. And part of the trade-off is going to be whether or not adding these wires are possible. And if so, what riders, if any, are worth the extra cost . So I specifically am going to talk about residual disability, inflation protection, future purchase, purchase options, catastrophic disability, and retirement benefits. There's no doubt that disability insurance is expensive, but adding riders to the disability policy can be money well-spent based on your specific personal situation. Now, an agent may offer you a smorgasborg of rider options. HR may offer you a support smorgasborg of rider options, but not all of these options are created equal. Let's learn more. I want to first talk about what writers you should pass on and why the first is the inflation protection that index your benefits to inflation. And it's normally based on the CPI index. I think it's a waste of money in view of the state of the American economy. Now the next is retirement benefit, and that requires the insurance company to put some money into some type of retirement investment. In addition to paying your monthly disability benefits since these are insurance products and not typically retirement investment benefits, I'd pass on lining the pockets of the insurance company, a better option would be for you to take a higher monthly benefit and then use it to invest. As you see fit to meet your retirement needs. What rider is a maybe, well, there's the catastrophic disability benefit that's going to pay for care. If you're unable to do two or more activities of daily living as a result of disability, the rider might be an option. If you have a family history of disease, like multiple sclerosis, Parkinson's auto immune disorders or dementia. Now purchasing that rider can be a tough call and it might be wiser again, to simply purchase a larger primary benefit. What riders would you be a fool not to purchase? One is the future purchase option that allows you to increase your benefit amount at a later date, without having to undergo an updated physical ordeal with a pre-existing condition clause. This allows you to increase your benefits as your income increases with minimal hassle. I think one of the most important rider options that everyone should have is the residual disability option. And that's particularly true. If you are a professional residual disability benefits are paid on a monthly basis. When you lose at least 20 to 25% of your monthly income as a result of your disability, the amount of the residual payment is generally based on a percentage of your loss and is calculated monthly. And this formula will vary from carrier to carrier. So there's no uniform, residual disability calculation, Residual Disability benefits can allow you to continue to practice until you decide to retire or you can't work. Now if your monthly income loss is between 75 to 80%, you can be paid residual benefits as if you were totally disabled and still work. In other words, you can earn 20 to 25% of your before monthly income and collect the full amount of your total disability benefits that residual disability rider gives you control over your ability to work, how long you work and the kind of hours that you, you can work. In other words, it gives you some control. Otherwise, you're going to find yourself in an all or nothing, total disability situation. This will give you options, but be aware there are policy provisions that say you have to be disabled, totally disabled for a period of time before you can collect residual disability benefits. In my experience, that's backwards. Most of my clients, particularly professional clients want to continue working and they don't want to stop until they have to. So they're residually disabled before they're totally disabled, not totally disabled and then residually disabled. So that's an important fact that you need to know if you're going to purchase this rider and make sure that you're discussing it with your agent. So do yourself a big favor. I think you owe it to yourself and your family to purchase an individual disability policy from an independent agent, and then have the proposed policies in writers reviewed by an attorney such as myself. Yeah, I know that you're probably going to pay more for a tailored personal protection policy that you can count on, but I don't think you should make a mistake that would Rob you of your peace of mind and financial security by blowing this off and saying, I can't afford it. There are some things that you need to afford and should be able to afford. Call me if you have any questions about buying a disability insurance policy, increasing coverage, or applying for your benefits in this next segment, I want to do some myth-busting about policies. Stay tuned . Welcome back. Let's talk about the myths that you probably believe about disability insurance agents and the truth. My job is to be a MythBuster about the world of disability insurance. And today I'm going to talk about myths that you probably believe about your disability insurance agent. And we'll talk about the truth. If you have a choice, you should probably get an individual disability policy that ensures your occupation to provide you with financial security and peace of mind. If you were to become disabled, I have individual disability insurance policy because I'm the owner of this business. And I have not only to support my office and , but I have to support my family. So I also have, by the way , uh , disability , uh , coverage that will cover the expenses of my business is called overhead disability coverage. But I also have individual disability insurance coverage for myself. When you're looking for insurance , uh, you may want to ask, well, what kind of disability agent should I contact? Should I contact an independent insurance agent, the agent for the disability carrier, like the standard guardian Berkshire principle , Ameritas union central or mass mutual, or the agent for a professional association, like the AMA, the ADA, the Florida bar, or some other professional association. These are great questions. Look, disability insurance agents get paid a commission by the insurance company for selling you a policy regardless of the type of policy or soul . And in my mind, commissions are really not the issue. That's how they get paid that standard. I think the type of insurance agent that you pick should be one that has your best interest at heart and can present you with a variety of options. Now, neither the agent for standard guardian Berkshire, principal America's union central or mass mutual, or the agent for the AMA group, disability insurance policy through an association, have an incentive to learn about your personal needs, your occupation and your financial goals. My father Thomas Cavey was an independent insurance agent and he worked to get the best policy for his clients at a fair price. And in fact, he had his own individual disability policy, which saved our family financially when he became disabled. I think you should be purchasing your disability insurance agent from an independent agent who can sell you disability insurance from any one of these companies, but sell you a policy that meets your financial needs. So why would you want an independent agent? Well, all of these companies, the standard guardian Berkshire principle , Ameritas union, central mass mutual, they all offer different types of policies. The key here is to select the one that's best for you. I've written a go-to book that we have been advertising in the course of this podcast that goes into detail about the terms and a disability policy that you don't want to see, and the terms that you do want to see. I suggest that you order a copy of this book so that you understand the disability world before you contact an independent agent. From my perspective, as a disability insurance attorney representing , uh , disability policy holders across the United States, I think that is important that you sit down with this independent agent and discuss your occupational duties. The standard of disability found in the policy, the policy limit on benefits and the periods of those benefits benefits. In other words, mental nervous limitations, the exclusion of certain medical conditions like subjective medical conditions. The find is fibromyalgia where migraine headaches and understand offsets and reductions because many policies will reduce your benefits by the receipt of social security, disability, benefits you or your family members receive, or even reduce your benefits. If you have received a settlement as a result of a personal injury case. So you need to understand in this instance what your net benefits would be after offsets, you want a personalized policy that fits your needs. And one as we've talked about before, that will change as your circumstances changes , uh , with that future benefit option. Now, why would you want to propose disability quote and policy to be reviewed by a disability attorney such as myself? Well, I think that the independent agent should give you a comparison of proposed disability policies so that you can compare features and benefits. However, what I have found is that many agents fail to analyze and consider the impact of the definition of occupational duties, the standard of disability offsets and reductions properly, and they don't consider any other disability policies that you have and consider the interaction between these policies. Because sometimes these policies will say, we won't pay you benefits. If you're getting benefits from another disability care, that makes one or both of these policies potentially worthless. So don't buy based on price because you're insuring yourself and your family. I don't know about you, but I think I'm worth a whole lot. Now, the agents are not generally involved in the appeal of denied disability insurance claims and are never in the courtroom unless they're being sued. So they don't really understand how courts will interpret the definition of occupational duties, the standard of disability or offsets. And I think that's particularly true. Uh, involve a case , uh, with a university of Virginia physician, he discovered that that the definition of disability in his policy was defined as the area of medicine. He was boarded in, as opposed to the specialty used practicing. At the time he became disabled. Now that's a heck of a lesson to learn when you're disabled and you can't go back to work, you learn that you don't have any coverage. That's crazy many agents don't consider how one disability care may allow a carrier to reduce the disability benefits by the receipt of other disability benefits. So in other words, as I've said, the policy may say, Hey, look, if you get individual disability benefits from another carrier, we're not, we're going to offset whatever you get. Or it might say, if you get group insurance benefits, we're going to reduce your individual disability benefits by whatever you get. You need to understand the interaction of these offset provisions and policies that you're looking at and policies that you have because ultimately these policies can be made worthless by these offsets and the worst time to learn this is when you're disabled. So do yourself a big favor and purchase a policy through an independent agent and consider having the policies reviewed by an attorney, such as myself. I know you're going to pay more for that tailored personal protection, and you're going to have to pay a lawyer to review these policies. But ultimately this is about your peace of mind. So the truth is you want an independent agent, just like my dad in the next segment, I'll be talking about what every long-term disability policy holder has to know about exclusions in their disability insurance policy. So stay tuned.

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Nancy L. Cavey:

Welcome back to winning. Isn't easy. I'm going to talk about what every long-term disability policy holder has to know about exclusions in their disability insurance policy. When you apply for disability insurance, you're going to be asked a lot of questions about your medical history and your hobbies. Your answers might mean certain medical conditions you have are excluded for a period of time or disability caused by certain activity can be excluded from coverage. And there will be exclusion riders added to your policy that will limit , uh, the benefits that are payable for these certain medical conditions or certain activities. So let's learn about the two common exclusions and the price for not telling the truth. When you apply for disability insurance, you're gonna be asked a lot of questions about your medical conditions . So the carrier can determine if they're going to cover a disability caused by a preexisting condition. And you're also going to be asked about whether you participate in dangerous activities like scuba diving, rock climbing, flying , um , skydiving, or other activities that the carrier might consider to be dangerous. Let's first talk about preexisting conditions. The discipline carrier is going to ask these questions to determine their risk, that they will have to pay you benefits for a preexisting condition as a result of an accident or injury occurred. Uh, uh, and this is done by the underwriting specialist. Now what's important. Here are the medical conditions that you have at the time you apply. It's not uncommon for policies to exclude medical conditions. You have. So let's say for example, you're a dentist and you have carpal tunnel syndrome. You can fully expect that the disability carrier is going to exclude coverage for any disability arising out of carpal tunnel. They'll have you sign the right rider that says, look, we're not going to pay any benefits for carpal tunnel, or they may say we won't pay benefits for carpal tunnel. If you are disabled in this certain period of time. And I actually had that happen to one of my clients who was a dentist. Fortunately, he was smart enough to contact me before he stopped working. And we looked at his disability policy and there was in fact, a rider limiting coverage for carpal tunnel. But the problem that he had was arthritis in his fingers, particularly in his thumb that made it difficult for him to hold and use instruments. Now I knew the disability carrier was going to say, aha, carpal tunnel, carpal tunnel. So what we did before he stopped working and apply for benefits was to have him treat with an orthopedic surgeon. We got x-rays that documented the damage to the joint in his fingers, particularly his thumb. We had a physical exam address, the limited range of motion and the problems with grip and the tingling and numbness. But we were able to establish that it wasn't carpal tunnel that was causing these problems. It was the arthritic condition in his hand. Now, ultimately he got his disability benefits, not withstanding the rider for carpal tunnel syndrome. Now you're also asked what dangerous activities do you do that you do rock climbing and scuba diving. Do you fly? Do you do hella skiing? You know, those activities are important because the carrier is going to consider whether they want to insure you. If you are disabled , uh, as a result of an accident or injury. Cause while you're doing these activities, they're risk adverse. It's as simple as that and that they don't want to pay for disability. Benefits caused by activities that are commonly known to cause injury or even death. Now, there are also some other common policy exclusions that you need to understand. If you are , um, injured while you are engaging in act of war or by an act of war engaged in criminal activity and even foreign travel disability benefits might be excluded. Now , what happens if you don't tell the truth? The answer is pretty simple. If you become disabled and you apply for benefits, the carrier is going to do an investigation of your medical records to determine what the cause of this ability is. Is it due to that preexisting condition that they excluded, or is it due to a condition that you failed to disclose at the time you applied for benefits that can result in a claims, denial, not telling the truth about your medical condition can result in the whole , uh , policy being voided. If you become disabled in a certain period of time after your application in the policy becomes effective. Now, the other thing is going to be that they'll refund the premium and they'll say, well, too bad. So sad. You didn't tell us the truth. You have no insurance, but here's your money back. And I assure you, you're going to have a fight on your hands telling the truth is crucial. Not only is it crucial to determine whether or not you are going to have coverage, but the nature of that coverage. So do yourself a favor and be honest because carriers do investigations and they will deny a claim if you've lied, or if your condition is due to a pre-existing condition, that's been exp that's been excluded by the terms of the rider or you're engaging in activities that you shouldn't be doing that are specifically excluded again, by the terms of the policy or the rider . Well, that's it for this episode, if you like this podcast, consider liking our page, leaving a review or sharing it with your friends and family. Remember our podcast comes out weekly. So tune in next week for another episode of winning isn't easy. Thanks.