Many people consider buying LTD insurance, but it’s at this stage that they need to understand what would fall under cover under the policy and what would not fall under cover. These provisions spell out conditions or circumstances that are not covered under the plan.
Knowing these terms beforehand, before filing the claim, can prevent surprises due to misunderstanding of the definitions of terms during later stages of the process. Quite often, LTD policies will cover a broad range of disabilities but only provided that the specific criteria laid out in the policy have been met.
Common Limitations in LTD Policies
One of the most common limitations found in LTD policies is with the length of time benefits will be paid. Whereas some policies only pay benefits for short lengths of time, such as two years, others pay benefits up to the date of retirement age. A maximum may be placed on the amount of benefits paid based on a percentage of the person’s pre-disability income.
These may replace only 60% to 80% of your income, which could be totally inadequate for an above-average earner. Understand how much you will be entitled to receive and for how long, as this could impact your financial planning during a disability.
Legal Representation in Reviewing LTD Policies
With the long-term disability policy being of such a complex nature and full of landmines, it is often advisable that your coverage be reviewed by an attorney specializing in the field of disability law. The attorney will explain and go through all the limitations and exclusions in your policy so that you understand what is covered and what is not.
It allows one, with the aid of an LTD lawyer in case of denial, to have a better chance of appealing for the benefits one is entitled to. Knowing all exclusions of your policy in advance can save one from sudden denials and also help to tackle it in a better way.
Pre-Existing Condition Exclusions
Many LTD policies include pre-existing condition exclusions. These may apply to bar a claimant from receiving benefits where the disability relates to a pre-existing condition. A typical definition of a pre-existing condition in this regard is an injury, illness, or other condition with which the insured sought medical treatment or for which they received a diagnosis within some period of time-usually between three to six months prior to the effective date of the policy.
These can be particularly problematic if a person’s disability is linked with some previous condition about which they had no knowledge when purchasing the insurance. It is, therefore, very important to know what exclusions exist vis-à-vis pre-existing conditions and to consider your medical history and whether your medical background could affect the coverage provided.
Exclusions Relating to Types of Disability
LTD policies may also exclude certain types of disabilities, often referred to as “moral hazards.” These are disabilities that result from behaviors that could have been avoided or are self-inflicted. For instance, most policies would not pay benefits if the disability resulted from drug or alcohol use or self-inflicted injuries.
Psychological conditions such as depression or anxiety may be subjected to stricter requirements and limits, depending on the policy. These exclusions can really affect those with such conditions, leaving them without the necessary financial support during a very distressing period of their lives.
Work and War-Related Disabilities
The other most common exclusion to LTD policies includes disabilities sustained from war or terrorism. The standard LTD policy doesn’t cover injuries or illnesses contracted and incurred while active in combat or within the involvement of a foreign war.
Other policies may not cover a disability if it occurs when committing a crime or if the disability is a deliberate self-inflicted injury committed in the perpetration of an unlawful act. It is crucial to know these types of exclusions for individuals who, by personal or professional choice, may be participating in activities with higher risks.
Final Words
Anyone who relies on the prevailing benefits of a long-term disability policy during such periods of sickness or injury must, therefore, be cognizant of the limitations and exclusions that exist in these policies. Most policies limit the duration of benefits payable to the conditions covered and exclusions that apply to pre-existing conditions, deliberate self-inflicted injuries, and disabilities arising out of high-risk activities.
Knowledge of these terms may save you from uninformed decisions and possible frustration when a claim gets denied. While going through the fine print or disputing a claim, it would be advisable to seek a lawyer who specializes in disability law for insights to improve your chances of gaining the benefits needed. After all, it is all about thoroughly understanding and preparing to handle the complexity of LTD insurance.
