Long Term Disability Claims FAQs
What is long term disability (LTD)?
Long term disability, or LTD, is an insurance plan intended to protect individuals who suffer a disability from enduring large financial loss because they have lost their ability to fulfill their job duties. A long term disability policy allows affected individuals to continue collecting their income for an extended period of time when they cannot work due to the disability.
When purchasing long term disability insurance should an attorney review the policy?
Every insurance policy is a legal contract developed by teams of skilled lawyers working and modifying the document over a period of many years. Understanding what a policy means and comparing the policies of different companies requires an understanding of the jargon of the insurance business and a familiarity with how legal terms have evolved and have been interpreted by the courts. If you have any doubts what the contract means and whether or not it will protect you after spending thousands in premiums, and to avoid risking litigation in the future, it is far more sensible to have an informed opinion at the outset.
Who should buy long term care insurance?
A long term care insurance policy is not for everyone. For a limited population a long term care policy makes sense as an affordable and worthwhile form of insurance. Buying long term coverage should not cause financial hardship and force you to forego other financial needs.
Although the need for long term care can arise gradually as a person ages and needs more and more assistance with activities of daily living, for most, a stroke or a heart attack will be the precipitating event. Those with acute illnesses may need nursing home care for a matter of months, while others may need care for years.
Who determines if you are entitled to benefits?
All policies have “gatekeepers” who have the power to decide if you are eligible for benefits. Every policy contains terms usually referred to as “eligibility for benefits,” “qualifying for benefits,” or “benefit conditions.” Gatekeepers are a critical feature of every long term care policy and one you should carefully study before you buy because there is a big difference between companies when it comes to who decides if the company will pay out money.
Can an insurance company rescind my coverage?
An insurer can rescind a policy and refuse to honor a claim where the policyholder has not provided full and complete information in the application. Where the language of the application is clear and capable of only one interpretation, where there have been no modifications in the application made by the sales agent, the purchaser had knowledge of the information requested, the policyholder concealed requested information or misrepresented his or her history and the misrepresentation was material or critical, then the insurer can rescind the policy.
What is an elimination period?
Most long term care insurance policies require policyholders to pay for their own care for a specified number of days before they are entitled to receive benefits. The days paid for directly by the policyholder are commonly referred to as an “elimination period,” which is very much like a deductible in accident insurance. In the long term care policy, the deductible is set forth in days rather than dollars. Some companies offer products without an elimination period, but most require as few as 30 days to as long as one year.
