When it comes to disability insurance, there are lots of rumors and misunderstandings that people have. From how to file a claim to what type of policy is best to the tricks insurance companies use to wrongfully deny claims, it can be difficult to determine the importance of this type of insurance. Furthermore, it can be extremely difficult to navigate the claims process and determine whether you have been wrongfully denied benefits.
A recent article in the Huffington Post: http://www.huffingtonpost.com/erin-havel/disability-insurance_b_2908929.html highlights some of the abuses of insurance companies and the methods they use for denying claims, especially under ERISA. It also touches on some of the common mistakes claimants make when filing that in turn cause their claim to be denied. As an insurance lawyer who deals with wrongful denials every day, I can agree with much of what the article’s author says. Unfortunately, insurance companies are always looking to improve their bottom line and wrongful denials do happen. However, there are some common misunderstandings represented in this article that stress the importance of consulting with an experienced insurance lawyer before both purchasing a policy and filing a claim.
The first is that under ERISA, there is generally a 180-day appeal deadline, not 60 days. Although it can and does vary from plan to plan, 180-days is much more common. Regardless, you should check your policy carefully and know this information before the need to ever file a claim occurs.
The second is that not all disability policies are governed by ERISA. This fosters an unfair environment because the government has exempted itself and its employees from these rules, rules that are strict and lead to more claims denials. So two disabled people, facing the exact same challenges and restrictions, and having the exact same policy could end up with two different outcomes depending on whether they work for the government or a private employer.
While the article gives great examples of how disability insurance could be a burden and might not be worth the money you pay, I still want to stress the importance of purchasing a disability policy. The 2012 Long-Term Disability Claims Review, sponsored by the Council for Disability Awareness, recently found that the number of long-term disability claims has continued to rise for the fourth year in a row. However, the number of wage earners protected by disability insurance continues to decline. Sadly, the group who depends on their income the most – those just starting their careers – are the least likely to invest in this type of insurance.
The truth is that young people don’t feel the need to purchase this type of insurance. They feel as if they are invincible and they’re not. Accidents happen and a 25-year-old, only a few years into their career with a small savings is going to rely more heavily on disability income should they become disabled than a 55-year-old who has spent years building their savings and other forms of incomes, such as stocks and bonds.
My biggest point is that disability insurance should not be something that is feared or overlooked. Sometimes those who are not familiar with insurance law hear horror stories and get mixed up by all of the “facts” floating around out there. Insurance law is tricky and sometimes insurance companies are guilty of wrongful denial. That’s why insurance lawyers are here to help and unravel the complicated language that trips the average Joe up. Don’t be afraid to reach out if you need help or have questions.