by Doug Hessel
Whether offered as an employee benefit through a group plan or purchased as an individual policy to help create a family safety net, long-term disability (LTD) insurance provides income when a policyholder suffers an injury or illness and can’t work. While most of us don’t believe, and can’t imagine, that we will ever need it, the value of such coverage is self-evident. Knowing it’s there certainly provides reassurance to policyholders and their families.
Like most things that seem self-evident, however, real life circumstances are often less than simple. If you’re in a coma, no one would suggest that you should come in to work anyway, but if you’re in pain, who decides if you’re in too much pain to work? Should your insurer take your word for it? Does it serve an insurance company to believe you, and if it disagrees, who is the final arbiter?
On September 9, the California state legislature unanimously passed SB 621 with the intent to take the ultimate decision-making authority for disability claims out of the hands of insurance companies and turn it over to the courts. The legislation is now awaiting the governor’s signature, which is considered almost certain. Originally authored by California’s new insurance commissioner Davey Jones when he was a state assemblyman, the bill continues many years of efforts to do away with “discretionary clauses” by which insurers reserve the right to make the final ruling on the legitimacy of disability claims.
For instance, you claim a back injury and your insurer decides that it is not disabling. At that point you appeal to your carrier. If they deny you again, and a discretionary clause is part of their policy, your options are extremely limited. Few courts would support your right to pursue a claim further. (continue reading…)