Long-term disability claims — the individual policy

By Harold Geller | July 16, 2009 | Last updated on July 16, 2009
4 min read
  • Obtaining up-to-date information about the insured area of specialization; and
  • Providing up-to-date income information and making recommendations on potential increases in benefit dollar value coverage.

The secondary but significant benefit to an agent who offers continuing service is the opportunity to maintain client contact. Close contact offers a wonderful marketing opportunity if clients or their friends and family require other products and services.

A few suggestions to keep in mind when offering LTD insurance:

  • The applicant’s health may be a crucial factor — depending on whether the policy requires evidence about health status at application and/or delivery. In group policies where coverage is extended on a non-medical basis, there may be an anti-selection bias for persons with pre-existing conditions;
  • When medical evidence is required, the applicant must fully disclose all medical issues and answer all underwriting questions or risk voiding the policy at time of claim for alleged misrepresentation; and
  • In individual policies the amount of insurance coverage sought must reflect an insurable interest — in other words the applicant’s earnings. Likewise, an insured whose income may increase might want a policy option to increase his benefit quantum to reflect an increasing insurable interest. So keeping tabs on your client’s coverage needs may give rise to the opportunity to offer other appropriate products and services.

    When to pass the client to a lawyer

    If a claim occurs, promptly provide your client with all forms he or she must file. Along with the client, a broker should review all aspects of the policy that are relevant to the terms of coverage, obligations of the client and claims process. Your client should also be advised to take great care in providing detailed, accurate and complete claims information.

    In many cases the client must push an attending physician to complete the APS in detail, with reference to the applicable definition of “partial,” “total” and/or “reoccurring” disability. And these answers must make specific reference to the client’s specific limitations.

    If a benefits claim is denied, then the client should be advised to consult a specialist who can assess the claim and, if appropriate, advocate the claim to the insurer.

    From the agent’s point of view, a referral to an experienced long-term disability lawyer is a client service. A well-placed referral provides valuable assistance to the client and relieves the agent of the uncomfortable role of being an advocate for a client in what is, essentially, a legal dispute. After all, no agent wants to play part-time lawyer.

    Harold Geller is an expert on legal issues affecting financial intermediaries and their clients. As part of this service, he helps long-term disability claimants assess their claims and, if appropriate, present their claims to insurers. Harold is also a well-known industry commentator, a CE provider and principal of Geller & Associates, the long-term disability division of Doucet McBride LLP.

    (07/16/09)

    Harold Geller

    • This is Part Two of a three-part series on long-term disability (LTD). View Part One here.

    Now perhaps more than ever, clients and prospects are aware of the impact of risk and downside events on their financial plans.

    Within this context, insurance agents have a unique opportunity to present LTD insurance as a necessary part of a holistic financial plan. Likewise, financial advisors and planners who team up with life insurance agents can broaden their offerings and provide complete financial planning — while those who are not licensed can partner with a life agent to create a distinct advantage.

    Full coverage when a client needs assistance

    LTD policies help income earners when they’re most vulnerable — in times of illness or injury. These policies can cover many variations of disability including partial, reoccurring, and the myriad definitions of total disability that can be either very limited or highly inclusive.

    The benefit, as with all types of loss insurance, is undoubtedly limited to peace of mind — except when an insured event occurs. LTD benefits offer a silver lining when a client falls ill. And while it’s better to never have to file an LTD benefit claim, the client benefits from peace of mind stemming from the knowledge that his or her family is guaranteed reliable and continuing income during the total disability.

    Of course the key advantage of an individual (as opposed to a group) LTD policy is that it’s portable. The insured must have earned income to cover premiums but there can be one or many sources of that income. A second significant advantage is that the client may select an individual LTD policy that provides complete after-tax replacement of income.

    Opportunity arises from professional advice

    A clear marketing advantage falls to an agent who is able to present the options for coverage in a way that reflects the applicant’s unique needs, risks and concerns.

    A professional or a highly skilled worker may be better served by a policy definition of “total disability” that reflects her or his own area of specialization. By contrast, a person whose work skills are highly portable may need only a transition period from one job to another to no longer be considered disabled.

    For example, a doctor may be qualified to practice as a generalist but may have spent many years building a business based upon a highly specialized area of practice. That doctor would be ill-suited to a two-year “own occupation” definition of total disability, but would be well served by an extended “own area of specialization” definition of total disability. A less specialized colleague, however, may not need this level of protection. In order to advise a client meaningfully about the most suitable coverage, a holistic planning exercise with clear communication of options is necessary.

    And it’s important to keep current with your clients to ensure any information provided to the insurer remains current and relevant. This goes beyond providing up-to-date contact data in case of a lapse event. It includes, where appropriate:

    • Obtaining up-to-date information about the insured area of specialization; and
    • Providing up-to-date income information and making recommendations on potential increases in benefit dollar value coverage.

    The secondary but significant benefit to an agent who offers continuing service is the opportunity to maintain client contact. Close contact offers a wonderful marketing opportunity if clients or their friends and family require other products and services.

    A few suggestions to keep in mind when offering LTD insurance:

  • The applicant’s health may be a crucial factor — depending on whether the policy requires evidence about health status at application and/or delivery. In group policies where coverage is extended on a non-medical basis, there may be an anti-selection bias for persons with pre-existing conditions;
  • When medical evidence is required, the applicant must fully disclose all medical issues and answer all underwriting questions or risk voiding the policy at time of claim for alleged misrepresentation; and
  • In individual policies the amount of insurance coverage sought must reflect an insurable interest — in other words the applicant’s earnings. Likewise, an insured whose income may increase might want a policy option to increase his benefit quantum to reflect an increasing insurable interest. So keeping tabs on your client’s coverage needs may give rise to the opportunity to offer other appropriate products and services.

    When to pass the client to a lawyer

    If a claim occurs, promptly provide your client with all forms he or she must file. Along with the client, a broker should review all aspects of the policy that are relevant to the terms of coverage, obligations of the client and claims process. Your client should also be advised to take great care in providing detailed, accurate and complete claims information.

    In many cases the client must push an attending physician to complete the APS in detail, with reference to the applicable definition of “partial,” “total” and/or “reoccurring” disability. And these answers must make specific reference to the client’s specific limitations.

    If a benefits claim is denied, then the client should be advised to consult a specialist who can assess the claim and, if appropriate, advocate the claim to the insurer.

    From the agent’s point of view, a referral to an experienced long-term disability lawyer is a client service. A well-placed referral provides valuable assistance to the client and relieves the agent of the uncomfortable role of being an advocate for a client in what is, essentially, a legal dispute. After all, no agent wants to play part-time lawyer.

    Harold Geller is an expert on legal issues affecting financial intermediaries and their clients. As part of this service, he helps long-term disability claimants assess their claims and, if appropriate, present their claims to insurers. Harold is also a well-known industry commentator, a CE provider and principal of Geller & Associates, the long-term disability division of Doucet McBride LLP.

    (07/16/09)

    • This is Part Two of a three-part series on long-term disability (LTD). View Part One here.

    Now perhaps more than ever, clients and prospects are aware of the impact of risk and downside events on their financial plans.

    Within this context, insurance agents have a unique opportunity to present LTD insurance as a necessary part of a holistic financial plan. Likewise, financial advisors and planners who team up with life insurance agents can broaden their offerings and provide complete financial planning — while those who are not licensed can partner with a life agent to create a distinct advantage.

    Full coverage when a client needs assistance

    LTD policies help income earners when they’re most vulnerable — in times of illness or injury. These policies can cover many variations of disability including partial, reoccurring, and the myriad definitions of total disability that can be either very limited or highly inclusive.

    The benefit, as with all types of loss insurance, is undoubtedly limited to peace of mind — except when an insured event occurs. LTD benefits offer a silver lining when a client falls ill. And while it’s better to never have to file an LTD benefit claim, the client benefits from peace of mind stemming from the knowledge that his or her family is guaranteed reliable and continuing income during the total disability.

    Of course the key advantage of an individual (as opposed to a group) LTD policy is that it’s portable. The insured must have earned income to cover premiums but there can be one or many sources of that income. A second significant advantage is that the client may select an individual LTD policy that provides complete after-tax replacement of income.

    Opportunity arises from professional advice

    A clear marketing advantage falls to an agent who is able to present the options for coverage in a way that reflects the applicant’s unique needs, risks and concerns.

    A professional or a highly skilled worker may be better served by a policy definition of “total disability” that reflects her or his own area of specialization. By contrast, a person whose work skills are highly portable may need only a transition period from one job to another to no longer be considered disabled.

    For example, a doctor may be qualified to practice as a generalist but may have spent many years building a business based upon a highly specialized area of practice. That doctor would be ill-suited to a two-year “own occupation” definition of total disability, but would be well served by an extended “own area of specialization” definition of total disability. A less specialized colleague, however, may not need this level of protection. In order to advise a client meaningfully about the most suitable coverage, a holistic planning exercise with clear communication of options is necessary.

    And it’s important to keep current with your clients to ensure any information provided to the insurer remains current and relevant. This goes beyond providing up-to-date contact data in case of a lapse event. It includes, where appropriate:

    • Obtaining up-to-date information about the insured area of specialization; and
    • Providing up-to-date income information and making recommendations on potential increases in benefit dollar value coverage.

    The secondary but significant benefit to an agent who offers continuing service is the opportunity to maintain client contact. Close contact offers a wonderful marketing opportunity if clients or their friends and family require other products and services.

    A few suggestions to keep in mind when offering LTD insurance:

  • The applicant’s health may be a crucial factor — depending on whether the policy requires evidence about health status at application and/or delivery. In group policies where coverage is extended on a non-medical basis, there may be an anti-selection bias for persons with pre-existing conditions;
  • When medical evidence is required, the applicant must fully disclose all medical issues and answer all underwriting questions or risk voiding the policy at time of claim for alleged misrepresentation; and
  • In individual policies the amount of insurance coverage sought must reflect an insurable interest — in other words the applicant’s earnings. Likewise, an insured whose income may increase might want a policy option to increase his benefit quantum to reflect an increasing insurable interest. So keeping tabs on your client’s coverage needs may give rise to the opportunity to offer other appropriate products and services.

    When to pass the client to a lawyer

    If a claim occurs, promptly provide your client with all forms he or she must file. Along with the client, a broker should review all aspects of the policy that are relevant to the terms of coverage, obligations of the client and claims process. Your client should also be advised to take great care in providing detailed, accurate and complete claims information.

    In many cases the client must push an attending physician to complete the APS in detail, with reference to the applicable definition of “partial,” “total” and/or “reoccurring” disability. And these answers must make specific reference to the client’s specific limitations.

    If a benefits claim is denied, then the client should be advised to consult a specialist who can assess the claim and, if appropriate, advocate the claim to the insurer.

    From the agent’s point of view, a referral to an experienced long-term disability lawyer is a client service. A well-placed referral provides valuable assistance to the client and relieves the agent of the uncomfortable role of being an advocate for a client in what is, essentially, a legal dispute. After all, no agent wants to play part-time lawyer.

    Harold Geller is an expert on legal issues affecting financial intermediaries and their clients. As part of this service, he helps long-term disability claimants assess their claims and, if appropriate, present their claims to insurers. Harold is also a well-known industry commentator, a CE provider and principal of Geller & Associates, the long-term disability division of Doucet McBride LLP.

    (07/16/09)

    • This is Part Two of a three-part series on long-term disability (LTD). View Part One here.

    Now perhaps more than ever, clients and prospects are aware of the impact of risk and downside events on their financial plans.

    Within this context, insurance agents have a unique opportunity to present LTD insurance as a necessary part of a holistic financial plan. Likewise, financial advisors and planners who team up with life insurance agents can broaden their offerings and provide complete financial planning — while those who are not licensed can partner with a life agent to create a distinct advantage.

    Full coverage when a client needs assistance

    LTD policies help income earners when they’re most vulnerable — in times of illness or injury. These policies can cover many variations of disability including partial, reoccurring, and the myriad definitions of total disability that can be either very limited or highly inclusive.

    The benefit, as with all types of loss insurance, is undoubtedly limited to peace of mind — except when an insured event occurs. LTD benefits offer a silver lining when a client falls ill. And while it’s better to never have to file an LTD benefit claim, the client benefits from peace of mind stemming from the knowledge that his or her family is guaranteed reliable and continuing income during the total disability.

    Of course the key advantage of an individual (as opposed to a group) LTD policy is that it’s portable. The insured must have earned income to cover premiums but there can be one or many sources of that income. A second significant advantage is that the client may select an individual LTD policy that provides complete after-tax replacement of income.

    Opportunity arises from professional advice

    A clear marketing advantage falls to an agent who is able to present the options for coverage in a way that reflects the applicant’s unique needs, risks and concerns.

    A professional or a highly skilled worker may be better served by a policy definition of “total disability” that reflects her or his own area of specialization. By contrast, a person whose work skills are highly portable may need only a transition period from one job to another to no longer be considered disabled.

    For example, a doctor may be qualified to practice as a generalist but may have spent many years building a business based upon a highly specialized area of practice. That doctor would be ill-suited to a two-year “own occupation” definition of total disability, but would be well served by an extended “own area of specialization” definition of total disability. A less specialized colleague, however, may not need this level of protection. In order to advise a client meaningfully about the most suitable coverage, a holistic planning exercise with clear communication of options is necessary.

    And it’s important to keep current with your clients to ensure any information provided to the insurer remains current and relevant. This goes beyond providing up-to-date contact data in case of a lapse event. It includes, where appropriate:

    • Obtaining up-to-date information about the insured area of specialization; and
    • Providing up-to-date income information and making recommendations on potential increases in benefit dollar value coverage.

    The secondary but significant benefit to an agent who offers continuing service is the opportunity to maintain client contact. Close contact offers a wonderful marketing opportunity if clients or their friends and family require other products and services.

    A few suggestions to keep in mind when offering LTD insurance:

  • The applicant’s health may be a crucial factor — depending on whether the policy requires evidence about health status at application and/or delivery. In group policies where coverage is extended on a non-medical basis, there may be an anti-selection bias for persons with pre-existing conditions;
  • When medical evidence is required, the applicant must fully disclose all medical issues and answer all underwriting questions or risk voiding the policy at time of claim for alleged misrepresentation; and
  • In individual policies the amount of insurance coverage sought must reflect an insurable interest — in other words the applicant’s earnings. Likewise, an insured whose income may increase might want a policy option to increase his benefit quantum to reflect an increasing insurable interest. So keeping tabs on your client’s coverage needs may give rise to the opportunity to offer other appropriate products and services.

    When to pass the client to a lawyer

    If a claim occurs, promptly provide your client with all forms he or she must file. Along with the client, a broker should review all aspects of the policy that are relevant to the terms of coverage, obligations of the client and claims process. Your client should also be advised to take great care in providing detailed, accurate and complete claims information.

    In many cases the client must push an attending physician to complete the APS in detail, with reference to the applicable definition of “partial,” “total” and/or “reoccurring” disability. And these answers must make specific reference to the client’s specific limitations.

    If a benefits claim is denied, then the client should be advised to consult a specialist who can assess the claim and, if appropriate, advocate the claim to the insurer.

    From the agent’s point of view, a referral to an experienced long-term disability lawyer is a client service. A well-placed referral provides valuable assistance to the client and relieves the agent of the uncomfortable role of being an advocate for a client in what is, essentially, a legal dispute. After all, no agent wants to play part-time lawyer.

    Harold Geller is an expert on legal issues affecting financial intermediaries and their clients. As part of this service, he helps long-term disability claimants assess their claims and, if appropriate, present their claims to insurers. Harold is also a well-known industry commentator, a CE provider and principal of Geller & Associates, the long-term disability division of Doucet McBride LLP.

    (07/16/09)