Expert Warns Disability Claimants What to Expect From Insurance Companies

November 25, 2008.

If you are on disability, or become disabled, you may worry what will happen if your disability insurer files for bankruptcy. Now is the time to review your state's insurance guarantee fund limits, says Frank N. Darras, the nation's leading disability and long-term care insurance lawyer.

Contact your state Department of Insurance and ask what your state's maximum limit is if your insurer goes belly up.

In this down economy, expect a "slow pay strategy" and remember, if your insurance company is hanging onto your claim payments, their bottom line looks stronger, says Darras.

"If you are currently on claim many carriers have adopted the strategy of slow paying your claim," says Darras. "You may have noticed that your carrier didn't receive your paperwork and you continually get the same questions about information you have provided time and time again. Your carrier may be suggesting they need new information. If this is happening, chances are, your carrier is delaying payment."

It looks as if this tried and true strategy is in action again by big insurance. Wake up, claimants, with stock prices down and no investment income earnings, you are virtually guaranteed disability insurers will take longer and longer to get you your money, says Darras.

Darras offers answers to key questions:

Q. If my company goes bankrupt will my coverage end?

A. Your claim will be taken over by your state's Department of Insurance Guaranty Insurance Fund. Your claim may ultimately get paid but there are state caps on the total amount covered. You also lose any right to collect for bad faith, extra-contractual damages, emotional distress and punitive or punishment damages.

Q. If I am currently on claim how do I protect my benefits?

A. Bring your list of restrictions and limitations to your treating doctor at your regular visits. List your physical problems, from severity of pain to depression, medication side effects, even sleeping difficulties.

Q. If my claim is delayed and denied, what are the next steps? What do I do?

A. Don't ever give up! Disability insurers depend on claimants running out of gas and giving up. Get free advice and counsel early so you understand what your carrier is doing and prepare for the worst.

Q. Is it too late to get my own disability policy now?

A. Many carriers are still offering individual disability policies to age 65. Shop carefully.

Q. If I am diagnosed with a disability and then lose my job, can I get disability in addition to my unemployment?

A. If you are being treated and have restrictions and limitations before your coverage ends you may be entitled to benefits. Your doctor will need to evaluate your disability and determine whether your problems prevented you from performing all or a portion of your duties before your coverage ended.

"One in five Americans becomes disabled for a year or more. Half the bankruptcies filed last year were due to crushing medical bills from an unforeseen accident or prolonged sickness," says Darras.

Protect yourself now, with individual disability insurance that pays tax-free benefits if a sickness or accident prevents you from working.