A Cooperative DI Claim Effort: Suggestions For The Professional Advisor

Editor’s Note: This article is excerpted from Allan Checkoway’s latest book, Getting Paid: An Insider’s Guide to Filing Your Long Term Disability Claim or Appeal with The Department of Veterans Affairs, The Social Security Administration, Your Disability Insurer. While the title would lead you to believe that it is geared toward consumers, this comprehensive book is an excellent hands-on manual for producers as well. It will prove to be invaluable when helping your clients deal with a disability claim—a perfect addition to your reference library.
The evolution of long term disability (LTD) insurance in recent years necessitates a more intensive approach to filing LTD claims. Your involvement as the professional advisor (agent, broker, financial planner) when filing an LTD claim has become much more necessary. It’s imperative that you, as the professional advisor, clearly understand the LTD claims process and how it fits with the current generation of LTD products. Consider the following.

Evolution of Today’s Individual LTD Products Up until the mid-1970s, the industry standard was to offer disability products featuring: Protection in one’s own occupation for two or five years or until age 65, depending on the insured individual’s occupation. Partial or residual disability protection without the requirement of a prior total disability. Limited policy exclusions for disabilities acquired during war or an act of war, self-inflicted injuries, or commission of a felony and no benefits paid during incarceration.
Financial Losses, Tougher Standards With worsening loss ratios, it didn’t take too many claims at high indemnity levels to damage an insurer’s profitability. Although insurers had provided the most liberal forms of disability coverage, deteriorating loss ratios led to significant “regret,” requiring drastic measures in the LTD claims approval process. Liberalized underwriting standards disappeared and “stick to the book” tough underwriting became the new standard. “Own occupation” definitions of disability began to disappear. Restrictions on mental and nervous conditions, and drug- and alcohol-related claims became the norm. “Soft tissue” (chronic fatigue, carpal tunnel, fibromyalgia) restrictions began to appear. Last, but not least, rigid claims practices became the order of the day. Claims that would have been paid without question in previous years were being denied or contested or “negotiated.”

Today’s Disability Claims Procedures If there is incomplete information that requires further clarification, claimants run the added risk of their claim being contested. It is absolutely imperative that disability income claims be submitted correctly the first time around.
Prominent gray areas about which a professional advisor must be aware are as follows:
• Lack of clarity about the occupational duties of the insured individual’s job.
• Claims information that does not support the inability to perform the occupation performed at the point of disability.
• An attending physician’s statement that does not validate the disability being reported.
• Insufficient medical documentation to support the claim in question.
• The appearance that the claimant is choosing not to return to work when the cause of disability and the doctor’s report indicate that recovery should be possible.
• What appears to be a marginal or partial disability that is being “stretched” into a total disability.

The New Era of Claims Determination Individual disability coverage requires submission of an application supported by sufficient medical documentation. Unlike group LTD coverage, with individual disability coverage there is 100 percent agent involvement in the process. An insurer trusts an agent to protect its best interests when going through the application process. Policy issuance happens when there is complete cooperation among applicant, agent and underwriter. Therefore, an agent can be of enormous value in the claims process.

Claim Form Submission Consider a young man in the prime of life. Then fast-forward to decades later when he, an insured marketing vice president of a high-tech company, becomes disabled. Consider his transition from wage earner to disability claimant. He has enjoyed a lifetime of good health. His work ethic and high level of motivation and creativity have led to substantial business success.
The industry standard is to mail the claim form to the insured individual for him to complete his portion. He sends the attending physician’s portion to his doctor to complete and return to his insurance company. His employer will identify his occupation, including a complete job description, and report his earnings at the point of disability.
There are three parts of the puzzle that need to fit together: the statements of the insured person, the employer, and the attending physician.
What more can be done by the agent? A lot. The insured individual is now facing the most psychologically trying event of his career. He is used to being the breadwinner, supporting his family and their lifestyle. But this phase has just ended.
Unaccustomed to being less than 100 percent healthy, he is now facing a sudden but very real nightmare. He is no longer a vice president; he is now a claimant who needs to trust that his LTD insurance company will treat him well. He is naturally apprehensive about insurance companies. He may have experienced difficulty when filing a claim or read a negative article about an insurance company not paying its claims.
From this moment on, our claimant will no longer be earning a paycheck. His income, hopefully, will be coming from an insurance company. Never (or seldom) before has he found the need to file an insurance claim. The experience is intimidating.
And what about the disability itself? Workouts at his health club, along with racquetball and golf, had been pleasurable after-hours activities. Will he ever be able to return to those activities? Doubt and apprehension are now present. Fear, a newfound anxiety, and possibly depression may soon be present as well.
Quarterbacking the Claims Process. This is your opportunity to provide the “team support” and comfort that claimants greatly appreciate when faced with the emotional upset and financial consequences of a long term disability. You can outline the claims process itself to claimants so that they know exactly what to expect. Explain their rights to them. Then review all areas of the claimant’s disability coverage so that all claim forms are submitted at the same time. In effect, you can act as the point person in the claims process.
With you “quarterbacking” the claims process, the claimant will not feel alone in dealing with strangers. You are his ally. He trusted you years ago when he followed your recommendations and purchased his disability coverage from you. You now have the opportunity to be of even more value than you were at the start.
There is no way anyone can appreciate and understand what it’s like to become disabled in the blink of an eye, unless they’ve experienced it. Disability affects not only the claimant but his family and friends as well. His life will never be the same. In addition to making sure the “i’s” are all dotted, your assistance can give your client an enormous psychological boost. You’re on the same team together.

March 2012 issue of Broker World Magazine. Author’s Bio Allan  Checkoway, RHU RHU, has been in the field of health care insurance for more than 30 years. He is principal of the Disability Services Group and specializes in the brokerage placement of disability and long term care insurance coverage.

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