Many disabled people prefer private disability insurance to traditional disability insurance. However, these policies can be hard to understand for people who are not experienced with insurance programs. They can include exclusions that may not cover you in the event you get a disability.
Exclusions are clauses written into a disability insurance policy. They refer to conditions that the disability insurance policy will not cover. Common exclusions in private disability insurance policies include pre-existing conditions, substance abuse disorders, and mental illnesses.
Disability Insurance Exclusions
Disability insurance policies typically have an exclusionary clause, which means the insurance company will not pay for any disabilities that fall directly under the exclusion.
Having exclusionary clauses makes it clear what risks and incidences the insurance provider will not cover.
The goal of insurance companies is not to reject valid claims. As part of their commitment, they will ensure that:
- They evaluate all claims thoroughly, fairly, and objectively.
- They settle legitimate claims with a high level of customer service.
- They help claimants in their efforts to return to work where it is acceptable to do so.
Below, we will examine some standard disability insurance policy exclusions.
Common Private Disability Insurance Exclusions
When you submit a claim for private disability insurance, you do it with the objective of receiving payments from your provider in a timely manner and with the assumption that they will treat you fairly. You have, after all, paid a premium to guarantee that you are protected in the event of a debilitating accident or illness.
Unfortunately, there are limitations and exclusions in numerous private disability insurance plans that will prevent you from receiving benefits. Read below for the most common limitations and exclusions and how they could affect your payments.
Preexisting Condition
Under the preexisting condition clause, disability benefits may be limited if an insured person has a preexisting medical condition that was diagnosed and treated prior to applying for insurance.
Some long-term disability policies use a “lookback period” and a “waiting period” to determine if a condition can be considered pre-existing.
Looking-back periods are used to determine whether conditions are considered preexisting under the policy. The duration of these might vary from ninety days to six months and perhaps even a year.
The waiting period is the duration you must be insured before you can receive coverage for a preexisting condition that comes within the lookback period. On average, the waiting period is anywhere between one and two years; however, this might vary depending on the legislation and the state.
In order to determine if they will cover you, insurance companies review medical records to find out if you have ever been diagnosed with a disease or disorder, had an evaluation, or received any kind of treatment.
We recommend familiarizing yourself with the pre-existing condition clause and other policy exclusions. If you have been denied coverage by an insurance provider, you may be able to get them to change their decision by filing an appeal, either internally or externally. The insurance firm may have:
- Unfairly labeled a medical condition as pre-existing;
- Unjustly rejecting a claim following the expiration of the exclusionary period;
- They made their judgment on the basis of an easily addressed technicality, or
- Refused to pay out due to a pre-existing condition, even though it was a factor in the impairment but was not the sole cause
A disability attorney can examine your policy to see whether your insurance company wrongfully denied your claim for disability benefits. An attorney will discuss any options available to you under the terms of the disability policy.
Mental Illness
In most cases, a private disability policy will only pay benefits for 24 months, or a specific time period, for a mental or neurological condition.
This limitation means that if the impairment was caused or aggravated by a mental or neurological disorder listed in the most recent edition of the Diagnostic and Statistical Manual (“DSM”) of Mental Disorders by the American Psychiatric Association, you will only receive benefits for a specific time period defined in your policy.
Such policies commonly include conditions such as dementia, anxiety, depression, or stress. The standard limitation for mental and neurological benefits is two years.
Substance Abuse Disorders
The most recent version of the DSM also includes a section that categorizes disorders associated with substance abuse and alcoholism. Although there is no guarantee of coverage for disabilities caused by substance misuse or alcoholism, if there is coverage, it is frequently limited to 24 months.
It is important to use extreme caution when it comes to substance abuse limitations if you are currently taking prescription medicine for any condition. Unfortunately, insurers may try to convince you that you are taking more medication than is necessary for your condition or injury because some of these prescriptions are easily abused.
Substance abuse limitations can limit or even reject valid insurance claims for physical conditions.
Can Insurance Companies Apply Ambiguous Exclusions?
Insurance companies’ disability plans often have vague exclusions. There are two main reasons for these ambiguous exclusions:
- Getting new policyholders: A lot of people read unclear exclusions in a positive light, thinking that their claims will be protected.
- Refusing claims: In practice, insurance firms frequently apply exclusions in a very strict manner in order to deny valid claims.
If the insurance provider denies your disability insurance claim because of a vague exclusion, your state law may back up your claim for benefits.
Due to this ambiguous “rule,” referred to as the contra proferentem rule, a policyholder’s interests must be strictly upheld, and the policy provider’s interests must be strictly downplayed in the event of an ambiguity in the insurance contract.
Assume, for example, that a provision in your private disability insurance policy specifically excludes impairments related to mobility. Later on in life, you experience a debilitating disease characterized by involuntary movements as one of its numerous symptoms. The insurance provider may reject your application for disability benefits, citing the exclusion as the reason.
The movement-based exclusion is not clear, and it could be interpreted as only excluding disabling diseases where the main symptom is mobility impairments, like Parkinson’s disease. The exclusion is so vague that the insurer could interpret it to include any disease or accident that had even a slight impact on one’s mobility.
Therefore, even though the insurer denied your claim at first, you may still be eligible for benefits.
Sometimes the language included within an exclusionary clause is not obviously ambiguous. In such cases, the court will give each party the opportunity to present evidence from outside sources in order to settle the ambiguity issue.
Exclusionary Situations
The following are examples of situations that could lead to exclusions.
Acts of War: Injuries sustained while serving in the military may not be covered by your disability insurance policy.
Pregnancy and Childbirth: Disability insurance does not cover normal births and the problems that come with them. However, it may cover problems that are not normal for pregnant women, like those that require bed rest.
Incarceration: If you are incarcerated, your disability insurance policy is unlikely to provide any benefits to you.
Flights: If you work as a crew member on a flight or plane, your disability insurance is unlikely to cover any health issues that you get on the job. You are only exempt if you get hurt while on a regularly scheduled commercial travel.
Civil Disturbance: No disability coverage will cover any health problems you sustain while you are involved in any kind of civil disobedience or disturbance.
Work-Related Injury: If you get injured or sick while on the job, your disability insurance policy is unlikely to provide coverage; however, workers’ compensation will.
How Can I Overcome an Exclusion or Limitation?
Limitations or exclusions are often cited as reasons for limiting or rejecting disability insurance claims. By seeking the help of a qualified attorney, there may be ways to recover your disability payments despite these policy limitations.
During the process of filing your claim, you should make a note of any other disabilities that restrict your capacity to work. If you have one condition that the insurance does not cover, you might be able to get benefits for another.
For example, if you have a physical condition along with a mental or neurological disability, the mental or neurological limitation might not be applicable if the policy wording says that the physical condition is what caused your disability.
You can get help navigating complex policy terminology and submitting a claim for benefits by working with a highly qualified disability insurance attorney.
How to Tackle a Private Disability Denial?
. Understanding and reviewing why your claim was denied is important because it will also help you determine the next steps for appealing the decision.
Gather Missing Details
If your private insurance application was denied because of a missing form or some other technical issue, make sure to fill out the form and submit it with your appeal. Check to see if your insurance company is missing any of the medical proof you sent them.
The insurance company or plan administrator may have overlooked some important medical records that pertain to your long-term disability insurance claim, which is an unfortunate but regular occurrence. You should investigate the records that the insurance company initially consulted in order to make their decision. Notify your claims agent if anything is amiss.
Get an official receipt or acknowledgment of receipt for the date your medical records were requested. Additionally, make sure to collect any documents that may be missing and submit them alongside your appeal.
Work with a Disability Lawyer
You should look for a lawyer as soon as possible to help with your disability case. The vast majority of private disability applicants do not retain legal representation until they have received letters of denial. Some of the most successful applicants choose to have legal representation when they submit their disability claim and application.
Evaluate the Validity of the Denial
Your lawyer will review the policy text, the stated grounds for denial, and any supplementary materials related to your private disability claim. Occasionally, the denial is due to simple errors; for example, the insurance company may have misclassified your employment responsibilities or simply does not have your full medical record.
Other insurance denials have more complicated causes. Here, it’s up to your lawyer to craft a strategy to prove your case, which typically involves gathering more proof showing you’re (a) disabled and (b) this policy covers your impairment.
Collect Supporting Evidence
Your attorney is an invaluable resource for identifying any further information that may be required to complete your claim, such as more medical tests or a functional capacity exam.
The goal is to make your application stronger by giving a complete picture of how your disability affects your body or capacity. If the insurance company wants to prove that you can work despite your injuries, a competent vocational expert can explain why that is not the case.
Create and Submit an Effective Appeal
If you want to increase your chances of successfully appealing a disability determination, it is important to have an expert attorney examine and submit the necessary papers. This will decrease the likelihood of mistakes or lost opportunities.
For many people, this kind of attention to detail is what separates getting fair compensation from getting another frustrating rejection.
Conclusion
if you are thinking of purchasing a private disability insurance policy, make sure to carefully review the fine print for a complete comprehension of the exclusions and limitations included in the plan. We recommend working with a disability attorney to avoid unnecessary problems with your claim.
