To be totally honest, most people don’t even belief that they’ll ever need to purchase disability insurance; let alone think that they’ll ever be ill or injured badly enough to use it. But the hard fact is, we just never know. And that basically is what insurance, of any/all types is for; taking care of those mishaps and unexpected events that can dramatically and often irreversibly change our lives. What you know about your chances of needing disability insurance, and what to do if you’re denied disability benefits, can dramatically effect the outcome should you unfortunately need the long-term disability payments. Before purchasing a long-term policy, make sure you completely understand the following:
- Worker’s Compensation covers few disabled individuals. Only those who were injured on the job or whose illness were caused by workplace environments and risks are covered by worker’s comp. According to the National Safety Council, that stipulation means that about 75% of all long-term disabilities are not covered. And those that do benefit with worker’s compensation only receive two-thirds of their income.
- You have the right to appeal should your benefits be denied. It’s a sad fact that though you would expect to be able to use your benefits when needed, insurance companies often fight tooth and nail paying when expected. They will find ways to deny or terminate your benefits whenever possible. However, a qualified and experienced ERISA attorney can help you appeal the denial of benefits and re-establish your monthly payments.
- Disability insurance is often offered as a job perk. Many organizations offer both short-term and long-term disability insurance coverage. Because it is group coverage, you can’t be denied and it is sponsored by your employer. These plans also often allow you to purchase additional coverage; extending your benefits or increasing the amount of income coverage available.
- Social Security coverage is not the same as insurance. Though you pay into Social Security, it is not likely to deliver benefits when needed. About 65% of first-time applicants are denied benefits and, when approved, are likely to only receive about $1,100 in monthly benefits. Long-term disability coverage helps cover what Social Security does not. Beware when using both however. Many insurance companies have sued recipients for the amount that they received from Social Security after their long-term benefits have kicked in. Make sure to talk to your ERISA attorney about this complication in receiving your payments.
- Credit card companies often offer disability insurance. At first glance this may seem odd, but it really is just a way of the credit card company to ensure that they continue to get paid should you become disabled. We recommend avoiding this coverage as, more often than not, the payouts will be just enough to cover your credit card balance and most other benefits are very limited.
- You’ll have a waiting period before your long-term benefits kick in. Most long-term disability plans are for the long-term, which means that you are not eligible to receive those benefits until all short-term benefits, including sick time, have been exhausted. This “elimination period” can be anywhere from 90 to 180 days.