News & Events

Many people are insured through an employer’s group policy. Coverages under group policies can vary widely depending upon the policies themselves. For example, disability insurance normally provides benefits when an insured becomes totally disabled by sickness or injury from actively performing the full time duties of his/her occupation. Definitions of the term “total disability” can vary wildly. Total disability can be defined in terms of the insured’s “usual occupation”, or in terms of “any occupation for which the insured is qualified by reason of education, training and experience”, in terms of “any occupation whatsoever” or a combination of these terms. 

 

When “total disability” refers to the insureds “usual occupation” or “own occupation” the insured will be deemed to be disabled if the insured becomes unable to perform his/her own professional specialization. For example, a surgeon who has early symptoms of Parkinson’s disease would likely be deemed disabled whereas an internist might not be. However, if the definition of total disability was in terms of any occupation for which the doctor “was qualified by reason of education, training and experience”, that same surgeon likely would not be disabled until he was unable to practice any specialty of medicine. In this instance the surgeon might suffer a precipitous drop in his income but be uninsured. 

 

Most policies, particularly group contracts, allow the insured to receive benefits only if the insured is totally disabled from his usual occupation for a defined period of time. After that time the definition may change to “any occupation” that the insured is qualified to perform. In the example used above, the surgeon might receive disability payments for two to five years and then lose disability status if still capable of being gainfully employed in any line of work for which he is qualified, potentially resulting in decreased income.

 

Often insureds are dismayed by the actual benefits they receive. Most policies will specify an amount to be paid and a maximum length of time for which such benefits will be paid. However, many insureds are surprised to discover the policy contains “offset provisions.” Offsets are reductions in benefits when income is received from other sources, such as: other disability policies, social security, state disability or worker’s compensation benefits. The utilization of offsets varies widely from policy to policy. Some offsets can severely reduce the coverage.

 

Group policies purchased through the work place which fall under the Employment Retirement Income Security Act, “ERISA,” may severely limit an individual’s rights.  

 

Individual policies not purchased through the workplace, are not affected by ERISA. These policies are purchased personally and with “after tax dollars” making individual policies more expensive. Individual policies may also contain offset provisions. Individual policies vary wildly in both the scope of coverage and cost.

 

It is important for any insured to carefully read his/her policy. Policy language can be confusing and it often behooves the insured to go over coverages with an insurance professional. Purchasing multiple policies does not always expand coverage.   An insurance professional can help an insured navigate these complicated waters and properly explain the benefits and the timing of those benefits.