How to understand the policy

• Author: Scott M. Riemer/Jennifer L. Hess
• Pages: 25-40

2-7

Chapter 2

HOW TO UNDERSTAND THE POLICY

§2.0 INTRODUCTION

Disability insurance policies often are long and dense, but most pol-

icies have very similar provisions, often required by State insurance law.

When an employer goes to an insurance company to purchase a

disability policy, the insurer gives the employer a policy lled with boil-

erplate language, but also gives the employer options to choose from on

several key provisions. e employer’s choices not only aect the premium

but also the employee’s ability to make a successful disability claim.

e most common options given concern the following terms:

(1) e denition of disability;

(2) e elimination period;

(3) Limitations and exclusions;

(4) Notice and proof of claim;

(5) Benet calculation;

(6) Other income osets;

(7) Benet duration; and

(8) Residual or partial disability.

We focus on these provisions because they are the ones that most

often make or break a claim.

§2.1 DEFINITION OF DISABILITY

Every LTD policy contains language dening the terms “Disabled”

or “Disability.” Your client must meet the denition to be eligible for

§2.1.1 ERISA Disability Claims and Litigation 2-8

benets. e three types of denitions that exist include own occupation

denitions, any occupation denitions, and hybrid denitions.

§2.1.1 Own Occupation

Under the “Own Occupation” denition of disability, you only need

to prove your client cannot perform the essential duties of his or her own

occupation—meaning the occupation being performing at the onset of

disability. is denition also may be called “Regular Occupation.”

is denition is the easiest to meet of the three denitions typically

seen in long term disability policies because your client need not be

totally disabled from all possible jobs—only his or her own occupation.

But this burden still can be dicult.

An example of an “Own Occupation” denition of disability is as

follows: “You are limited from performing all of the Material and Sub-

stantial Duties of your Own Occupation and you are not working in any

other occupation.”

Be mindful of additional denitions for the terms “Own Occupa-

tion” and/or “Material and Substantial Duties.” ese terms materially

impact the denition of disability. Generally, the insurance company will

look at how your client’s occupation is performed in the general econ-

omy. So, if a certain duty (e.g., frequent international travel) is unique

to your client’s employer, the insurer may not consider it as a material

and substantial duty of the occupation. e insurer may view it as a

duty specic to your employer or your location at the employer, rather

than as a duty common for others in your occupation. For purposes of

determining what your “occupation” is, most policies will look to “the

occupation you are routinely performing when your disability begins.”

§2.1.2 Any Occupation

“Any occupation” policies require you to satisfy a more stringent

standard. Generally, you must establish that your client cannot perform

any occupation for which he or she may be qualied based on education,

training, and experience. Proving disability under an “Any Occupation”

standard is more dicult because you must prove your client is incapable

of performing the duties of many jobs, not just his or her own.

An example of an “Any Occupation” denition of disability is as

follows: “You are unable to perform the material and substantial duties