Individual disability policies are one of the two most complicated products in our portfolio (the other being Long Term Care insurance). There are a lot of moving parts, and determine whether or not one is truly "disabled" is a function of the policy's definition of that term.
We're privileged today to bring you a guest post from our friends at Diversified Brokerage which I think does a fantastic job of explaining the nuances of how these definitions differ, and why that matters:
We're privileged today to bring you a guest post from our friends at Diversified Brokerage which I think does a fantastic job of explaining the nuances of how these definitions differ, and why that matters:
One word in the definition of disability in a disability contract can dramatically change how a claim is paid.
That word is either "or" or "and." You must pay special attention to this when reviewing the definition of disability.
If the definition of disability has the "and" word in the definition of disability, then a professional or employee would have to have a loss of time or duties AND a loss of income.
If the definition of disability has the "or" word in the definition of disability, then a professional or employee would have to have a loss of time or duties OR a loss of income.
It's important to ensure that your plan has the "or" language; with it, a professional could be back to work full-time and still be eligible for benefits as long as there is a loss of income from the disability. It also means that a professional could be receiving 100% of his/her income (delayed receivables or profits) and still be eligible for benefits as long as there is a loss of time or duties.
Most folks aren't aware of the impact of this one word in their Group LTD or Individual Disability contract, so here's your heads' up to make sure yours is an OR definition.
That word is either "or" or "and." You must pay special attention to this when reviewing the definition of disability.
If the definition of disability has the "and" word in the definition of disability, then a professional or employee would have to have a loss of time or duties AND a loss of income.
If the definition of disability has the "or" word in the definition of disability, then a professional or employee would have to have a loss of time or duties OR a loss of income.
It's important to ensure that your plan has the "or" language; with it, a professional could be back to work full-time and still be eligible for benefits as long as there is a loss of income from the disability. It also means that a professional could be receiving 100% of his/her income (delayed receivables or profits) and still be eligible for benefits as long as there is a loss of time or duties.
Most folks aren't aware of the impact of this one word in their Group LTD or Individual Disability contract, so here's your heads' up to make sure yours is an OR definition.
I'll just add that I often I often say “it’s the difference between you being disabled versus your wallet being disabled.”
Special IB Thanks to DB's Shaun M for her help on this post.
Special IB Thanks to DB's Shaun M for her help on this post.
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