HEALTH/BENEFITS
Avoiding Missteps In Advising Clients On DI Coverage & Claims Keeping clients fully informed will help agents avoid mistakes when selling and assisting in filing claims and ensure the client has security and peace of mind. By Frank Darras
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lients trust their agents with their long-term health in finding the right insurance products. Consider how special the agent-client relationship is, particularly when it comes to individually purchased disability insurance. People can go anywhere and choose any agent — but once they select you, their life and their family’s financial stability are in many ways in your hands. I have seen some agents make missteps along the way when advising consumers on the right coverage to buy as well as when the client is making an insurance claim. By the time these clients reach me to help resolve their questions and concerns, they are entirely turned off by the claims process and unhappy with their agents and may already have made fatal claim errors. Consumers must understand what they are buying and how their policy features will allow prompt payment of their monthly disability benefits. Keeping clients fully informed will help agents avoid mistakes when selling and assisting in filing claims and ensure the client has security and peace of mind.
Individual Disability Policy Highlights
Let’s review some of the best features of individual disability policies. » Individual disability coverage can provide monthly tax-free disability benefits so long as the insured pays the premiums. » Coverage is portable and not dependent on your employer. Private disability coverage travels with you when you 40
change jobs or companies. » Individual disability insurance can also offer occupation-specific coverage if you are unable to perform the important duties of your occupation, even if you can do some other occupation for which you are trained, educated or suited. » Today, most individual policies offer benefits to normal retirement age, and some can last for a policyholder’s entire life. » All companies offer cost-of-living adjustments to keep pace with rising inflation, which is a huge concern today. They also offer future increase options, so more monthly disability benefits can be added if you earn more money after the policy is issued, even with declining health. » Individual disability policies can also provide residual disability benefits if the insured can perform some occupational duties but suffers a 20% loss of earnings or more.
Differences From Group EmployerSponsored Disability
Employer-sponsored group plans are in stark contrast with some of the features above. Below are some key ways in which they differ. » Taxability of the benefits is based on who pays the premiums. If the employee pays the premiums using after-tax income, the benefits should flow tax-free. However, if the employer pays the premiums, benefits are taxable. If the premium costs are split, so is the tax liability. » Coverage ends when a client changes employers, or when the employer no longer offers the coverage as a group benefit or on a voluntary basis. » If the employee is unable to perform the important duties of your occupation, benefit payments may not begin if they are deemed able to perform any occupation they are adequately trained, educated or suited to do. » Most group policies contain self-report, musculoskeletal and mental/ner-
InsuranceNewsNet Magazine » October 2021
vous caps on monthly benefits as short as 12 months. Further, where most group plans require a 180-day period before benefit payments begin, individual policies can be as short as 30, 60 or 90 days before benefits begin accruing.
Considering Mental Wellness
Mental health and wellness have become more prominent issues in recent years. The National Alliance on Mental Illness reported that one in five U.S. adults — 51.5 million people — experience mental illness each year. The numbers are expected to rise, and there are several factors you need to be aware of when advising potential clients. Some individual and group disability plans offer mental health benefits to age 67 and others for as short as 12 months, so be careful what you are selling. Also, some group policies say that if your mental condition contributes to your disability, benefits may stop at 12, 18 or 24 months. So if your client has back surgery and they are depressed because they still have a limited range of motion, the claim would be capped at 12, 18 or 24 months. Depression in itself is a recognized mental disability and, in this case, it is occurring after the fact and may impair the claimant’s ability to work. Be sure to explain how your plan acknowledges and covers mental disabilities that are “caused by” or “due to” or a policy that has “contributed to” language. Furthermore, some experts believe the mental health impact of the COVID-19 outbreak will have a ripple effect throughout society for several years to come. Mental health issues are complex, and insurance companies often make the insured jump through various hoops with frequent delays and multiple denials, hoping your client will just give up. Despite the efficacy of the vaccine rollout, COVID-19 still impacts
