Individual Disability Insurance
A person can purchase disability coverage from an insurance company or on their own. If your employer does not provide disability insurance benefits, or you are a self-employed individual who needs disability coverage, you can purchase your own policy on the open market. Individual rates or premiums are based upon a wide variety of factors, including age, gender, health risks, pre-existing conditions, occupation, scope of coverage, benefit duration, and benefit amount.
These are individually underwritten private disability policies and are not governed by ERISA but rather by traditional state contract law.
Frequently, insurers are very willing to discuss a lump sum buyout of either a contested or open claim.
Litigation can either be in state or federal court (diversity). A private disability litigant has the leverage of a potential bad faith claim, the right to traditional discovery and a jury trial.
Private disability insurance benefits are fundamentally insurance “contracts.” There are individual policies (purchased by you as an individual) and group policies (coverage supplied as an employee benefit by your employer). Policies are written for short term disability benefits (usually 3-6 months) and lengthier disability benefits (usually after a waiting period and continuing to age 65). If you have private disability insurance coverage through your employer, you have the right to obtain a copy of the policy from your employer.
If you think you are eligible to file a claim for benefits under one of these types of policies:
- Be sure you will have the active support of your doctor(s). You will need the support of your doctor(s) far more than the advocacy of an attorney. Make sure your doctor will support you and understands that he/she will need to comply with documentation requirements of the insurance company before applying for disability benefits.
- Make sure that your treatment notes are complete and truly reflect the nature of your symptoms and functional limitations.
- It is often beneficial to get advice from an attorney before you apply. This could save a lot of time and frustration right from the start.
You should further understand that just because you think you qualify for these benefits, the disability insurance companies will typically deny your initial submission. In very few cases can an initial favorable decision be a given. Be meticulous when filling out the application.
Even if your claim is denied, you will have the right to appeal. Unfortunately, the appeal is almost always an internal review with the same insurance carrier that denied the claim initially. Appeals are difficult, but often successful if there is active support from your doctor(s) and attorney.
If the appeal to the insurance carrier is denied, you may have the right to appeal to court. Just because you have already been approved for private disability benefits, don’t assume you will continue to receive those benefits. Insurance companies are profit motivated. Your benefits can be cut off at any time if the carrier determines you no longer meet their definition of disability.
The majority of policies change their definition of disability after 24 months and benefits are often terminated at that time. While receiving benefits, you need to continually document your symptoms and functional limitations with your doctors in anticipation of an attempt by the insurance carrier to terminate your benefits. Also, most private disability insurance policies require you to apply for Social Security benefits as a condition of receiving disability benefits. This is legal and can have advantages for you, but you must be aware of your particular policy details.