What Are the Expectations of Insurance Companies About Long-Term Disability?
- Long-term disability insurance may cover different types of circumstances, depending on how a policy defines disability and the conditions required for filing a disability claim. Long-term disability coverage comes in three basic forms: any-occupation plans, own-occupation plans and education-training and experience plans. Any-occupation plans cover conditions that prevent a person from working in any job. Own-occupation plans cover conditions that prevent a person from working within their current line of work. Education-training and experience plans cover disabilities that prevent a person from working within a job that he's qualified to do. The type of policy a person has will determine what an insurance company expects in order to approve and pay on a claim.
- Regardless of the type of policy a person holds, insurance companies expect a claimant to provide proof of disability and how the condition affects his ability to work. The type of proof required will depend on the type of disability policy a person holds. Own-occupation plan policies are the most lenient in terms of requirements, while any-occupation plan policies are the most strict. In effect, any-occupation plans cover the most severe, disabling conditions, which prevent a person from functioning in any job capacity. In most cases, insurers expect a claimant's physician to support a disability claim. Claimants also are required to take an independent medical exam performed by a physician contracted by the insurance company.
- Unless a person suffers from a permanent disabling condition, insurance companies expect claimants to return to work as soon as possible. Most disability insurance plans cover anywhere from 50 to 60 percent of person's wages for two to five years, according to Insure.com, and insurance plan reference site. In order to reduce the amount of money paid out, insurance companies may work closely with a person's employer to ensure a person returns to work at the earliest possible time. In some cases a person can perform in a job that pays less than her former wage, in which case insurance companies may reduce the benefit amount a claimant receives based on how much she's able to earn.
- In some instances, a person may remain disabled for years at a time and in some cases, a disability becomes permanent. Most long-term disability insurance policies include a provision that requires claimants to file for Social Security disability benefits after a stated period of time. This provision allows insurance companies to offset their benefit payouts in cases where a person is approved for Social Security disability benefits. Once approved, the insurance company only has to ensure that claimants receive at least 50 to 60 percent of their wages in benefits. So, if Social Security pays 40 percent, the insurance company only has to pay the remaining 10 to 20 percent.
