Understanding disability insurance plans

Sheryle Ohme,
Assurant Employee Benefits
952.924.2921
sh**********@******nt.com
assurantemployeebenefits.com

Before you buy, understand what
your plan covers

NOT ALL DISABILITY insurance policies are created equal.

Some are designed for the budget-minded or first-time buyer while others are created to provide the most comprehensive coverage possible.

When you purchase disability coverage to protect the income of your employees in the event of illness or injury, you expect that coverage to pay benefits when they’re needed. Whether it will depends on the contract, and it’s important to understand what’s covered.

A disability contract represents the promise a disability insurance carrier makes to its customer. It defines who is covered, under what conditions they will be covered and how much they will be paid.

The most important part of a disability contract is arguably the definition of disability. Not only does it determine whether or not a claim will be paid, but it also drives the provisions included in the contract.

Some policies are specifically designed to benefit employees who suffer catastrophic disabilities and offer a more narrow definition of disability for a lower cost, while others provide a more encompassing definition under which more employees may qualify for benefits.

Premium splits allowed

When shopping for disability insurance, take time to consider the type of coverage you want and can afford, as well as the funding options available.

Many carriers offer disability products on either an employer-paid or employee-paid basis and will also allow you to split the premium cost with your employees.

When evaluating disability policies, ask your benefits broker the following questions:

• • What types of disabling events are covered?
• • How does an employee qualify for disability benefits?
• • Are there any exclusions I should be aware of?
• • How are pre-existing conditions handled?
• • How soon and for how long will employees receive benefits in the event of disability?
• • Will a disability benefit be reduced if an insured person receives income from other sources while on claim?

In a disability contract, one word can make all the difference. The cost of a disability insurance policy can be influenced by simple words such as ‘and’ or ‘or’. In some policies, a claimant may be considered disabled if there is a specified loss of earnings or the person is unable to work due to illness or injury. Other policies may require that a claimant experience an earnings loss and be unable to work. In general, an ‘or’ definition provides a lower threshold for establishing disability, making it easier for employees to qualify for benefits.

Having the right disability insurance carrier is as important as having the right disability policy. There are several factors to consider when selecting a disability carrier, including: the financial strength of the company the company’s experience in disability insurance the philosophy of the claims organization the company’s demonstrated commitment to customer service hidden fine print in the disability contract the variety of plan options.

Ask your benefits broker about the reputation of the disability carriers he or she recommends, particularly as it relates to the claims process. Just as disability contracts vary, so do the resources available and the level of service provided to an insured person once a claim is filed.

Before choosing a carrier, you should know the following:

• •Who evaluates disability claims once they are submitted?
• •Is there a physician on staff to provide clinical review?  What about registered nurses and psychologists?
• •On average, how long does it take the carrier to make a decision on a claim?
• •What is the carrier’s process for communicating claims decisions and other information to insureds?
• •Does the carrier maintain a vocational rehabilitation staff,including certified vocational rehabilitation counselors, job accommodation experts and return-to-work specialists, to assist claimants who are able in returning to work?
• •What is the average experience level of the claims staff?  Do they receive ongoing professional education?
• •In the event a claim is denied, what is the carrier’s process for appealing the decision?

Knowing how a claim will be handled should you or an employee experience a disability not only helps in the decision-making process when you are preparing to purchase disability insurance but should also provide peace of mind once coverage is in place.