Disability insurance is coverage provided to employees should they become unable to work due to illness or injury.

Disability Insurance Benefits

Disability insurance is vital to workers who become disabled, as they often depend upon Long Term Disability (LTD) insurance payments to bridge the gap between the time they were injured and the time they are able to return to work. With this coverage, policyholders can continue to pay their regular monthly bills even when they can’t work due to a disability. Several factors can affect the limitations of long term disability (LTD) coverage.

Unum Life Insurance Company of America is one of the largest disability providers in the United States, but has become infamous for allegedly denying disability coverage claims.

The company’s reputation became so widespread that in 2002 CBS News’ 60 Minutes did an investigation and found that Unum employees were reportedly instructed and rewarded for denying claims that met policy requirements.

With this in mind, consumers should educate themselves on their insurance company’s disability coverage programs and the specific requirements to receive disability insurance benefits under their policies.

Here are some frequently asked consumer questions when researching or considering researching disability coverage:

How Does Disability Insurance Work?

Investopedia.com defines disability insurance as the financial coverage provided should an employee become too sick or injured to perform the occupational duties required in their job. Depending on the severity and nature of the condition, the worker would apply for short- or long-term disability coverage.

What are the differences between short-term and long-term disability benefits?

Both short-term and long-term disability insurance cover portions of the employee’s monthly salary up to a certain point during the period of disability. The main differences between the two are the amount of money provided and additional services covered, nerdwallet.com explains.

Short-term disability coverage typically replaces up to 70% of the employee’s base salary, and lasts for a few months to a year, depending on the policy. Short term disability insurance also tends to have a shorter waiting period in terms of benefits being paid.

Long-term disability coverage typically replaces up to 60% of the base salary, with the disability insurance benefits ending either when the disability is resolved, if a certain amount of years have passed, or if the employee reaches retirement age. Employees can typically expect to wait 90 days after an injury before disability insurance benefits are paid.

Disability insurance for COVID-19 has its own specifications.

Will LTD Insurance Payments Be Equal to My Salary?

Policy Genius points out that, most of the time, LTD payments are equal to approximately 60% of your total gross income, but it depends upon the policy. By contrast, short term disability (STD) payments usually cover between 70-80% of your gross monthly income.

Is There a Time Limit on LTD Insurance Payments?

Make sure to read your LTD policy closely because some conditions may contain footnotes denoting a time limit on your disability insurance benefits. Some mental illnesses, chronic pain, arthritis, and alcohol or drug abuse-related disabilities often have a 24-month cap on LTD coverage.

While short term disability plans typically last between 3 and 6 months, many long term disability plans last for two years, and others last for five or ten. Long term disability benefits can also last until retirement age—of course, this is a more expensive plan, but it could be the more cost-effective option depending on when a person becomes disabled and how long the disability lasts. However, the average disability claim lasts for just under three years, according to the Council for Disability Awareness.

What if I Receive Social Security Disability Benefits, Too?

Most of the time, insurance companies that provide long term disability benefits require the worker to apply for Social Security disability insurance benefits within a certain amount of time. The disability insurance companies reduce the payments they send you by the amount you receive from the Social Security disability program.

If you do not file a claim with Social Security, your insurance company may end your long term disability coverage completely.

If My Doctor Deems Me Permanently Disabled, Do I Need to Return to the Doctor?

Even if the doctor doesn’t believe any further treatments are available that will improve your condition, most LTD insurance policies demand continual proof of your disabled status through regular visits with your physician. If your doctor’s visits cease, the insurance company might believe your disability no longer exists, and your LTD payments could be stopped.

In the event your condition improves to the point your doctor says you can return to work, the LTD payments will stop.

Are All Mental Illnesses Treated the Same Under My LTD Plan?

According to Policy Genius, some disability insurance companies place a 24-month cap on covering mental illness, but others consider mental illness to be a pre-existing condition that won’t be covered at all.

If the insurance company’s underwriting guidelines allow long term disability for mental illness, those cases involving depression, panic attacks, anxiety or bipolar disorder have the best chances of receiving coverage because they can be successfully treated.

Schizophrenia may not be eligible for coverage under a long term disability plan because it is difficult to successfully control. Anyone who has attempted suicide may have to wait several years, often a decade, before the person can be eligible to obtain a long term disability policy at all.

What else do I need to know about disability insurance?

Here are some general disability insurance terms:

• Premium: How much money the consumer pays for the policy each month, a figure that’s determined by the benefit amount, the benefit period, the elimination period and other policy specifications.
• Benefit Amount: How much money the consumer would receive each month.
• Benefit Period: How long the consumer will be receiving money from the disability insurance policy.
• Elimination Period: Also called the waiting period, which is how long it will take for the benefits to be paid to the policyholder.
• Definition of Disability: While this varies between policies, most disability insurance companies define being “disabled” as the policyholder being unable to work at their current job, along with any similar occupation.

How do you get disability insurance?

There are several ways to get disability insurance, with workers having the option of buying their own or signing up with their company-sponsored coverage programs. Employees can sometimes buy disability insurance through their employer at a group rate, which is likely cheaper than trying to buy it themselves.

Another option is buying disability insurance through a professional association or from a disability insurance company directly.

Disability Insurance Companies

When finding a disability insurance company to use, there are many to choose from. Major companies include, but are not limited to:

• Aetna
• Cigna
• Unum
• The Hartford
• Liberty Mutual
• Lincoln Financial
• MetLife
• Northwestern Mutual
• Principal Financial
• Prudential
• Reliance Standard
• Sedgwick
• Sun Life
• The Standard
• Others

What If I Follow All the Rules, Am Still Disabled, But My LTD Payments Stop?

In the case of payment stoppage, you may have legal recourse.  Unum provides nearly 40% of all LTD insurance policies in the United States, covering about 17 million Americans. The company, however, has been accused of cutting off long term disability payments to many workers for no reason other than to allegedly satisfy shareholders, according to a report by the LA Times.

In 2002, the television show 60 Minutes interviewed Unum employees who reported they received financial rewards if they met a monthly quota of denied claims. One doctor who had worked for Unum said he was fired after he refused to back the company’s direction to deny claims to people who were disabled.

Since then, Unum and other disability insurance companies have faced thousands of lawsuits regarding accusations of unfairly denied claims. In some cases, plaintiffs have been awarded tens of millions of dollars in settlement money over their insurance denials.

Find a Disability Insurance Attorney

A growing number of people are coming forward with litigation against their disability insurance companies, alleging that they were unfairly denied their disability insurance.

If your long term disability insurance benefits from Unum or one of the other above-listed disability insurance companies were unfairly denied or terminated, you may be able to appeal the claim or file a lawsuit and pursue compensation. Pursuing litigation can be a daunting prospect, so Top Class Actions has laid the groundwork for you by connecting you with an experienced disability insurance attorney. Consulting a disability insurance attorney can help you determine if you have a claim, navigate the complexities of litigation, and maximize your potential compensation.