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Insurers Continue to Sell More LTD Policies, Deny Benefits

Unum, an insurer who sells long-term disability (LTD) policies, saw an increase in their sales during the third quarter of 2013. Unum executives gave the assessment during a third quarter earnings call. Sales of LTD policies by Unum were up 8.9 percent. Unum also stated that other insurers were using lower prices to try and sell policies.

Despite the increase in sales and the availability of LTD policies, insurers may make it difficult for policyholders to collect LTD benefits. “Insurers don’t like to pay long-term disability benefits because they can last until retirement. In cases where a worker is relatively young, an insurer may wind up paying LTD benefits for decades,” said Jeffrey Freedman, Managing Attorney.

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LTD policies are typically offered through an employer with the premiums paid for by an employee and/or their employer. If an employee becomes disabled and cannot work, LTD benefits are paid by the insurer to cover a portion of the employee’s lost wages. LTD benefits typically pay 50-70 percent of the employee’s salary if the employee becomes disabled.

LTD policies often have an “own occupation” clause built into the policies. This clause provides LTD benefits only if you cannot perform the duties of your current occupation. Benefits generally last 24 months under this clause. After 24 months, the LTD policies typically depend upon an “any occupation” clause for ongoing benefits. An “any occupation” clause looks at the employee’s work history and/or capacity for vocational retraining. If there is another job they can perform (other than their current occupation), the insurance company may claim the employee can find another line of work.

Harry Forrest, an attorney in Buffalo, New York, who handles disability cases and who assists our firm in these cases notes that, “Many times, if an employee is determined to be disabled and qualifies for LTD benefits, the insurer will pay benefits for 24 months. After the 24 months, the insurer will reassess the employee’s claim using the “any occupation” clause in an effort to determine that the employee can find another line of work and cut off future benefits. This can pose a significant hurdle for the client to secure ongoing benefits without the assistance of an attorney.”

If an employee is denied benefits under an employer-sponsored LTD policy, they must appeal directly to the insurer. Generally, there are two rounds of appeals to the insurer, and only after benefits are denied in appeal(s) to the insurer may an employee file a claim in Federal Court to further appeal the denial of the benefits.

“It’s important to have your doctor’s support during any appeal. Medical records will be crucial to prove an individual is disabled. If a claimant is missing any information or does not have proper documentation, it will be that much easier for the insurance company to deny benefits,” Freedman said.

In addition, insurers who issue LTD policies often encourage claimants to apply for Social Security Disability benefits. However, this is not always to a claimant’s advantage. Any amount received from Social Security will be offset or deducted from the LTD benefits. The same goes for any workers’ compensation benefits the employee may be receiving.

“Insurance companies are in the business of saving money. If they can deny benefits in an LTD case, they will. If a claimant has been denied, it may be advisable to consult an attorney knowledgeable in LTD cases,” Freedman said.