Long Term Disability Coverage

Most people purchase LTD insurance as a financial precaution in case a disability prevents them from earning an income or reduces their earning capacity.  Unfortunately at the time when a claim is necessary you are in an extremely vulnerable position, being physically or mentally disabled and without regular income.  The insurer’s decisions at this time can have a dramatic effect on your life.

However, in purchasing the policy many people pay little attention to the actual policy wordings and restrictions.  The wording of the policy and its exclusions often become the focus of much attention after you make a claim as the insurance company attempts to limit its obligation to pay you money.

Insurance policies, including LTD policies, are contracts.  Each party’s obligations are defined by the wording used in the policy.   A significant body of case law has developed regarding the interpretation of insurance policies and LTD policies.  There are also laws which aid in the interpretation of the insurer’s legal obligations to you.

It is important to consult with a lawyer.

Many times we are consulted and retained to provide opinions with LTD policies.

 If the insurance company is not living up to their obligations as set out in the LTD policy, then they may be in breach of contract and you may have the right to sue them for damages and to force them to make payments under the policy or even for a lump sum settlement of your benefits.  If the insurer’s conduct has been particularly egregious, then you may be entitled to an award of punitive damages for bad faith.

It is important to note that the cause of the disability is in most cases not relevant.  Your right to claim benefits from an LTD policy are not affected by your right to sue someone for causing you the injury.

A very common issue in LTD claims is whether benefits will continue beyond a particular time period.  For example, many people have LTD coverage for their “own occupation” for an initial period, often 24 months, and thereafter are only entitled to payment if they are disabled from “any occupation”.  Insurers often take the position that “any occupation” includes any job, regardless  of whether you are suited for the job by age, training, education, ability or even whether the job exists or is available.

There is a complex body of case law surrounding this issue and each person’s situation is unique.  The value of the right to on-going benefits can be significant and this coverage (which you have paid for) could make a significant difference in how you live your life.  Do not surrender these rights without seeking legal advice.  Make an informed decision.