Long-term disability claims — the individual policy

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 […]

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)