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Which Type of Disability Insurance Policy Do You Own?

Disability Claim Denials, Filing Disability Claims

Disability insurance policies come in several types. The type of policy you purchase affects your legal rights and the benefits you may receive. Here is an overview of the basic types of disability insurance policies.

Individual Disability Insurance:

As the name suggests, individual disability insurance policies are sold directly to individuals from the insurance company. They provide long-term disability benefits in the event of a disabling injury or illness. These policies are further divided into two categories: General and occupational. General policies insure against injury or illness that prevents the insured from performing all work; occupational policies provide benefits only if the insured cannot perform the material and substantial duties of his or her own occupation. An occupational policy provides greater benefits to the insured, who is entitled to benefits even if he or she is still able to perform work in another occupation. These policies provide fixed dollar amounts of coverage, such as $4,000 or $10,000 per month, instead of a percentage of the insured’s salary.

Group Disability Insurance:

Group disability insurance policies, as their name indicates, are sold through groups. Typically organizations, such as the AMA, will set up and make available these policies to their members. These policies usually provide variable amounts of coverage expressed as a percentage of the insured’s base salary, typically from 50-75%. Benefits may also be capped at a maximum fixed dollar amount (e.g. $7,000 per month) regardless of salary. Lastly, these policies often contain offsetting provisions which reduce benefits by the amount the insured receives from other sources such as Social Security or worker’s compensation.

Employer-Sponsored Disability Insurance:

Employer-sponsored disability insurance policies are provided through corporate employment and are both the least expensive policies and provide the least protection for insureds. They are similar to the group policies in that their benefits are a percentage of salary, but they are governed by the Employee Retirement Income Security Act of 1974 (ERISA). ERISA removes many of the protections of state law such as the right to a trial by jury and the potential for punitive damages if the insurer has acted in bad faith.

Ed Comitz and the disability insurance attorneys at Comitz | Beethe protect the disability insurance benefits of physicians and healthcare professionals nationwide. We provide disability income claim advice, assistance with filing disability claims, including completion of disability claim forms and representation in disability insurance litigation.

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