Individual Disability Insurance is coverage that you obtain outside of your employment and that you pay for out of household funds.
Individual Disability Insurance policies are much more expensive than the Group LTD policies that employers provide. Whereas most Group LTD policies are governed by ERISA, an Individual Disability Insurance policy is governed by state contract law, meaning that the playing field is fair for the disabled worker and that the claimant has a right to have a jury decide whether he or she is disabled as defined by the disability insurance policy.
Most Individual Disability Insurance (“IDI”) policies were issued years ago, often from companies like Paul Revere, MassMutual, CIGNA, Lincoln Financial or MetLife. These are excellent policies that usually do not have offsets for other income (such a Social Security Disability benefits) and provide “own occupation” coverage throughout the entire benefit period. Most IDI policies do not distinguish between physical disabilities and mental disabilities and have far fewer limitations on benefits than Group LTD policies.
Most importantly, the insurance companies handling these IDI claims are subject to state law and can be sued for bad faith and violations of the Unfair Settlement Practices Act in states that have such legislation. In egregious situations, the insurance company may be liable for punitive damages and/or the attorney fees of the claimant. Disabled persons with claims governed by ERISA do not have these options, as ERISA pre-empts all state law claims.
We have experience handling Individual Disability Insurance claims, appeals and lawsuits. We have successfully asserted claims for bad faith insurance practices and, on occasion, obtained settlements for more than the contractually-owed amount. We also have experience defending claimants against attempts to rescind the disability insurance policy based on post-claim underwriting and/or pre-existing medical conditions.
Contact us by phone or by using the Contact form for a free, initial consultation.