Disability Insurance Claim Basics

Disability insurance is either purchased by the individual or provided as a benefit of employment. It is designed to replace lost income when an individual is unable to work due to injury or sickness. A disability policy is a contract between the individual and the insurance company in which the individual (or their employer on their behalf) promises to pay premiums and the insurer promises to pay monthly benefits if you are unable to return to work.

Workers’ Compensation, State Disability, and Social Security Disability benefits differ from disability insurance in that they are government mandated plans designed to assist injured or disabled workers. The terms of a disability plan (often referred to as long term disability – LTD) are set forth in the contract of insurance and/or the SPD (Summary Plan Description). Important terms of the contract to note include:

  • Definition of Disability – definition often changes after 24 months of benefits
  • Duration of Benefits – some disabilities have limitations such as for mental/emotional illnesses
  • Amount of Benefits – either a set amount or a percentage of wages
  • Time Limitations for applying for benefits, appealing denials and filing civil actions
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