You have a disability insurance policy, and you’re sure that you have just experienced a disabling event that will enable you to collect benefits under the policy. But will the insurance company actually pay your disability claim?
That’s a question that is not uncommon among people who file for disability benefits. Sometimes insurance companies do deny disability benefit claims. This can happen for any number of reasons, particularly fraud. Nearly everyone either has or knows of a horror story that ended this way.
But more typically, the beneficiary goes through a fairly long process between the onset of disability and the actual receipt of benefits. This delay can lead to a lot of anxiety, including the belief that no benefits will be paid.
Will the insurance company pay your disability claim?
Yes, as Long as Your Disability Fits Within the Policy Description
This is a major source of conflict with disability claims. As ordinary citizens, most of us believe that we’re entitled to benefits as a result of any circumstances that prevent us from working. However, what events actually qualify for benefits is specifically described within the policy documents. If you have a disabling event that’s within those definitions, the insurance company will pay benefits.
It’s important to understand that all disability policies have exclusions. Typical exclusions include:
- An act of war (declared or undeclared)
- An insurrection, rebellion, or taking part in a civil disturbance
- An intentional self-inflicted injury
- You taking part in the commission of a crime, or an attempt to commit a crime
- An auto accident that is the result of driving under the influence of alcohol or illicit drugs
But there may be other more specific exclusions as well.
There is also an important provision relating to your occupation. Disability insurance policies are generally segregated between own occupation and any occupation and the difference between the two is significant.
Under an own occupation policy, a disability claim will be established based on the fact that you are unable to work in your current occupation. If you’re a teacher, and you are unable to continue working as a teacher, you’ll be entitled to benefits under your policy, even if you might be capable of working in a different job.
Under an any occupation policy, disability will be determined based on your ability to perform any job. That means that if you are a teacher, and unable to perform that job any longer, you will still not be entitled to receive benefits if you can work as a security guard.
Once again, the insurance company will pay benefits as long as your disability fits within the definitions in the policy.
Be Prepared to Document Your Claim
It’s important to understand that collecting benefits under a disability policy is not an automatic process. It’s seldom as simple as getting a note from your doctor.
Far more likely is that you will be required to document your case. That will be providing evidence from your employer and from various healthcare providers, indicating the nature and extent of your disability.
The better prepared you are, and the more evidence you accumulate, the greater likelihood that your benefits will be approved. For this reason, you must be proactive in cooperating with the insurance company, and provide any documentation requested.
Don’t Forget About the Elimination Period
Even under the best cases, there will usually be a delay in the payment of claims. This is usually the result of an elimination or waiting period. This is a period of time following your disability when you will not be eligible to receive benefits. Typically 90 days in length, it functions much like a deductible on other insurance policies, in that it limits the liability of the insurance company to pay benefits. This is reflected in your policy premiums too. The longer the waiting period, the lower your premium will be.
This is one of the reasons why you want to make sure that you fully understand the provisions of your disability insurance policy. It will state the elimination period in the documents, so that you will be fully prepared for this delay.
Delays Don’t Mean the Insurance Company Won’t Pay Your Claim
It would be great if you can get disability benefits within a week or two of becoming disabled, that way you never miss a paycheck. And actually you can get such a policy, but it will be prohibitively expensive since there is virtually no elimination period.
But I think most of us understand that this is not how the world works. The insurance company will need time to gather and evaluate information, both documentation that you provide and that which they obtain through their own efforts.
As a business, an insurance company has to make sure that the claims they are paying are legitimate. They must also screen benefit claims for potential fraud. Even though committing fraud is not your intention in any way, it is virtually an “occupational hazard” in the insurance industry, and they must be on constant guard against it.
Always understand however that delays and requests for additional documentation don’t mean that the insurance company won’t pay your claim. It just means they have to do their due diligence work before they pay.
Expect Some Conflict Along the Way
There’s always a push-pull element that develops anytime anyone files a claim for benefits with an insurance company. You want your benefits right away, but the insurance company seems to want more documentation than you believe is necessary. That will lead to periods of perceived conflict. But rest assured that it is part of the process.
Expect some conflict along the way in filing for your benefits. Even more important, anticipate it wherever possible. And be prepared with any and all documentation that you have. In a real way, the insurance company is looking for you to give them evidence as to why they should pay your claim. You should be prepared to fully cooperate in that effort.
Most of the reasons why you might be concerned if an insurance company will pay your disability claim has to do with the policy itself. If you choose the right policy, with the right provisions, you’ll get the benefits that you expect. But if you choose a policy that has the weakest provisions – because it is the least expensive – it can be the equivalent of having no disability insurance at all.